A consortium headed by Qatar's state-owned property group said Sunday it will fund its purchase of a former military barracks in the heart of one of London's most exclusive neighborhoods with a ground-breaking $2.5 billion Islamic financing deal.
Sharia, or Islamic law, prohibits charging or paying interest, so bankers and lawyers have developed a rapidly growing financial market by restructuring conventional products to make them compliant with Islam.
Qatari Diar and British-based CPC Group, which purchased the 12.8 acre (51.2 dunam) Chelsea barracks site at the end of January, said the deal would be the largest Islamic financing on a property in the United Kingdom, but it was not immediately possible to verify the claim.
The syndicated financing is fully underwritten by a mix of Western and Mideast banks, according to a press release issued by the developers.
"The financial structure developed here has allowed us to deliver a truly innovative financing solution for the global real estate sector," said Patrick Chenel, chief financial officer for Qatari Diar. "We have broken new ground with our advisers, by creating and setting up Islamic financing of a scale not seen before in a major real estate acquisition in [the] UK."
Developers plan to build housing on the site in Chelsea, an area popular with London's rich and famous who spend millions of pounds to live among exclusive boutiques and expensive restaurants.
The red-brick fronted barracks built in the 1960s will be demolished. The troops who once stayed there have already been relocated to Woolwich in southeast London.
"This is the most important redevelopment scheme in London in the last fifty years and therefore it is fitting that together we have secured this historic financing," said Christian Candy, founder of CPC Group.