Istisna Real Estate
Istisna’ is a contract whereby the purchaser asks the seller to manufacture a specifically defined product using the seller’s raw materials at a given price. The contract is a future contract by nature, in that it allows for the sale of a product that is not available at the time of sale. Istisna’ has many uses, and can be applied in construction contracting and manufacturing finance. It can also be combined with other Islamic financing products to form a derivative that allows for the financing of the full production – sale cycle.
EAB often uses this product to finance the construction of buildings, residential units, villas and other related products.
Murabaha Real Estate
Murabaha is defined as the sale of goods with an agreed upon profit mark-up on the cost. Murabaha sale are of two types: In the first type (Murabaha), the Islamic bank purchases the goods and avails them for sale without a prior promise from a customer to purchase the goods (such as in general trade). The sale is then done upon request by a buyer and a mark-up is added to the cost. The price may be paid in instalments over an agreed period of time.
In the second type (Murabaha to the Purchase Orderer), the Islamic bank purchases the goods ordered by a customer from a third party, and then sells these goods to the same customer, i.e. the bank purchases the goods only after a customer has made a promise to buy them from the bank.
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