Viewpoint – Swiss Shariah sunrise

Spending a week skiing in Switzerland over the recent school holidays reminded me of what a beautiful country it is, particularly among the mountains and around the lakes. Not wanting to turn our trip into a busman’s holiday, I got to thinking of excuses to come back, perhaps with a spot of real estate investment.

Back in the office I checked through the files, and scarily found that it’s more than 12 years since my first and indeed only investment into Swiss real estate. Structured Islamically, it was a warehouse in the fairly unknown place of Niederbipp, but strategically located (aren’t they always in property sales brochures!) almost equidistant from Basle, Bern and Zurich and next to some decent roads. A lovely new building and on a long lease if I recall correctly. Subsequently sold for a modest profit, I’ve done nothing since.

Investors ask about Switzerland from time to time, but with long gaps in between which is perhaps surprising. Obviously, the Swiss banks are famous for their wealth management and the country is a popular destination for Middle Eastern tourists. I’m informed that Interlaken is the most popular destination for travelers from the region, thanks to its publicity efforts and the locals making efforts to
accommodate, ranging from the more obvious Halal menus to (so the website advises) paragliding that allows the wearing of a veil.

A search through the archives of Islamic Finance news did not reveal any recent Shariah compliant real estate investment, but did report on the forthcoming Responsible Finance & Investment Summit, to be held in Zurich at the end of April. This will celebrate the responsible finance activity of both
Shariah compliant and conventional financial institutions from around the globe, and hopefully generate more interest in the local market as well.

Switzerland has always seemed to sit in the middle, providing stability and certainty amid the relative chaos beyond its borders. Certainly, looking at recent and forecast economic financials, while
GDP growth has moved around a bit, inflation remains steadfastly around 0.5% per annum, with the unemployment rate drifting glacially down to an impressively low 3% and with the benchmark interest rates basically zero. Seems like a very stable economic environment from which to start.

The tax structure can look challenging, with each canton having its own rules, but I distinctly remember the conference call with a representative from the Bern canton, in which our Niederbipp property was located. While new to Islamic real estate investment, he diligently worked through how it would work and we achieved an investment that was both Shariah compliant and without any adverse tax position. So, perhaps it is time for a new dawn of Islamic real estate investment into the land of mountains, lakes, chocolate and cheese. If you’ll allow me, a ‘Swiss Shariah sunrise’

This article was first published in Islamic Finance news Volume 15 Issue 17 dated the 25th April 2018.