At the World Bank’s 5th Global Housing Finance Conference, Alarife’s Bernadette Baird-Zars made a presentation entitled, “Leveraging Urban Land in AWQAF (Islamic land trusts) for Mixed-use Affordable Housing.”


Here’s a summary of her presentation:


One-fifth to two-thirds of all land in the historic centers and rapidly-urbanizing peripheries of Middle Eastern cities is held in permanent trusts for charitable purposes —waqf (or awqaf, plural). These plots of land represent a powerful asset to leverage substantial inclusive developments, but are almost universally underutilized. Current neglect is in part due to restrictions on sale and ‘purpose’ under their charters -upheld in religious tradition and practice- as well as the quasi-nationalization, centralization and neglect that has taken place in waqf across most of MENA in the past century.


Mixed-use, mixed-income developments align closely with the traditional purpose of the waqf. Public-sector redevelopment entities in many countries are the natural drivers of the process. Alarife Urban Associates is exploring implementation of this concept with local government led
initiatives in Tunisia, Morocco and Saudi Arabia to model sustainable financing mechanisms enabling development of permanently affordable units.


Waqf-driven developments can only succeed at scale if they coordinate with, and enhance, existing endeavors in the public, private, and citizen sector. Operating in the context of limited available developer or end-user finance is challenging, even with the upside from built-in expectations for income-generating cross-subsidies in waqf development. In these pilot initiatives, municipal redevelopment authorities have site control of a few large parcels and are developing agreements with local financial institutions to structure sharia-compliant loans for the construction or rehabilitation of high and medium-density mixed-use developments by approved developers. While some properties, due to their waqf mandate, require high ongoing levels of subsidy to support short-term leases by specific populations (e.g. recently-divorced mothers and their children), the long-term leasing rights are paired with modified sharia-compliant mortgage-like products, such as musharaka al mutanaqisa and ijara.


Obstacles to replicability include development capacity for complex mixed-use infill financing and design, and the scarcity of socially-driven ‘smart’ capital in the region. However, several former constraints on resale and trades have now been replaced by recent, and formal, re-interpretations of the financial rules governing the waqf. Alarife is in close conversations with several centers of Islamic finance thought
leadership that are recently prioritizing waqf revitalization, including the Islamic Development Bank.

Alarife Presents at World Bank Global Housing Finance Conference

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