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Under the sign of the crescent

What surprises could face Russian buyers in Islamic countries?
01.05.2012
Author: Dinara GRACHEV
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The purchase of foreign real estate is one of the signs of globalization. No one is surprised when a resident of Russia buys a house for many thousands of kilometers in a country with a different climate and way of life. However, we must not forget the proverb - they do not go to a strange monastery with their charter!
Among the countries in which Russians have recently been doing business and buying real estate, there are many where Islam is the main, and sometimes the state religion. Among them are Turkey, the United Arab Emirates, Egypt, Morocco and a number of others. In them, daily life, business traditions, and the process of buying a home differ significantly from the usual European standards.

The Charter of Islamic business
The more strictly Islamic traditions are observed in a country, the more distinctive the way of life and business. Those Muslims who do not want to deviate from the laws of religion in the business sphere, conduct business in accordance with Sharia law, which, as is known, prohibits accruing or paying interest. There are a number of concepts and principles of Islamic "halal" business based on the ideals of the Koran.
Sukuk, the Muslim equivalent of traditional bonds, means "legal document, act, receipt" in Arabic. This security is recognized by Sharia law, since holders of Islamic bonds receive income not from the increase in the value of securities, but from the income of the company that issued them.
There are many varieties of sukuk. For example, mudaraba is a contract according to which the owner of excess funds entrusts them to a person who has the experience to use them effectively. The income from such an agreement is distributed among the participants in accordance with the previously concluded share agreement. If losses occur, they are borne by the owner of the capital, and his partner does not receive remuneration for his efforts.
Another Islamic financing tool is called musharaka. It involves the joint participation of the bank and the client in the implementation of a project, according to which the profit received is divided between them in pre-agreed shares. In such an agreement, losses are subject to distribution in proportion to the shares of participation in the partnership.

Sharia, business and culture
If we talk about buying real estate, then from the point of view of Sharia, first of all, mortgage raises questions, where, in the European understanding, interest is absolutely necessary.
There are also Islamic ways to solve the problem. One of them is called murabaha, when a certain initial payment is required from the client. The client finds a real estate seller, after which he turns to the bank, which buys the house from the seller and resells it to the client. The client pays the remaining part of the cost of the apartment in installments without interest, but the price at which the bank resells the house to the client includes the bank's profit and inflationary costs.
Another option is ijara. The client finds a place to live, after which the bank buys it and rents it to the client. Thus, from this moment on, the client acts as a tenant, and the seller acts as a landlord. The landlord, as a rule, renegotiates the amount of rent taking into account changes in market prices. One of the main advantages of the Ijara model is that the client does not need to have a significant amount to conclude a contract.
However, in those countries where religion is separated from the state, as a rule, if a mortgage is used, it is in the form of traditional banking products. Another thing is how well housing lending is generally developed. So, in Turkey, where everything is as Europeanized as possible, the mortgage started working just a few years ago and is now also available to foreigners – but at rather high interest rates.

And in Egypt, as Irina Adam, managing director of the Egyptian company Second Home Real Estate & Investment, notes, at the moment there is no concept of a mortgage at all, but there is the possibility of installment payments, usually interest-free.
At the same time, in Egypt, the social and legislative spheres are not related to religion, and in fact are not influenced by it, especially since approximately 25% of the indigenous population of Egypt are Christians. Therefore, despite the fact that religion continues to play a significant role in the life of society, religious canons do not have a significant impact on the social sphere, including the business process. In addition to Turkey and Egypt, Lebanon, Syria, Morocco and some of the emirates of the UAE, primarily Dubai, are loyal to religion.

The subtleties of ethics
However, even if businesses and banks in a particular Muslim country operate in the usual mode, the way of life and traditions still have many features. For example, the Turks are characterized by a culture of bargaining, which is completely unusual for Russians. Yulia Titova, head of the foreign real estate department at BEST-Real Estate, notes that when Russians try to get discounts and lower prices, they usually do it quite harshly and straightforwardly. In Turkey, bargaining takes place with a smile and is a fascinating sight, with jokes and brand tricks.
Oriental people are traditionally hospitable: potential customers are greeted extremely cordially, fed, watered, and shown the sights. You will not find such comprehensive and sincere hospitality in Europe, Yulia Titova emphasizes. Turks are proud of their country, love their hometowns and respect traditions. For example, driving past a cemetery, they turn off the sound of the radio in the car out of respect for the dead. A traditional prayer takes place five times a day, but those who are busy at this time, for example, working with clients, do not necessarily participate in it. Unlike in the UAE, Friday is a working day in Turkey, and business life does not stop during fasting. However, holidays such as Eid al-Adha and Ramadan are weekends. Turks treat women with respect, but a woman should always behave with dignity. Therefore, the fair sex should not be afraid to conduct business independently – but it is always necessary to observe certain limits of decency.
Stricter mores in the countries of the Persian Gulf, among which the UAE is the most visited by Russians. At the same time, each of the emirates has its own rules. Zhanna Huseyn, head of the foreign real estate department at Prestige Property Group Peresvet Group, notes that, for example, in the Emirate of Sharjah, you can not sunbathe topless, be in a swimsuit in the lobby of hotels and other public places. In case of violation of the rule, the vice police is immediately called, which does not distinguish who exactly is the violator – a tourist or a local resident.
Being on the territory of the United Arab Emirates, you should not forget that most Muslims have a negative attitude to being photographed. If the main Muslim fast of Ramadan falls during your stay, then you need to behave very carefully in public places, because many Muslims do not eat or drink water during the fast throughout the daylight hours and generally behave extremely restrained. The strictest rules of conduct are in Saudi Arabia, where they follow Islamic traditions very strictly and do not rely on traditional European business methods. However, Islamic tourism is developed here, which, by the way, is no less profitable.
Having understood the Islamic model of economy and culture based on the principles of Sharia, you can discover the vast Muslim world in new aspects unfamiliar to tourists. Those who respect and understand the rules adopted in this world can feel quite comfortable in it and successfully conduct business and own real estate.

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