Mohamed Gamadid, a father of four, has been living in Wisconsin State in the United States for 25 years. He and his family visit Nairobi, a place they call home, once every year.
Gamadid is one of the many Muslims living abroad who would have liked to have a home back in Kenya, but haven’t achieved their dreams years on.
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For him, that was until early this year, when he saw his dream coming true.
“My family has been living in the US for quite some time now, visiting Kenya, which I call home has always been priority all along. Last year, I thought of buying a home in Nairobi with a financing model that abides by Sharia laws,” Gamadid says.
Speaking to Home & Away, he says that while in the US, he was looking for a housing company - but not a bank back home would cater for his dream.
He wanted a trusted avenue to channel his funds and get the house done without infringing on his Muslim beliefs of not taking any interest related product, which he believed banks rarely do.
“I was wondering whether there were any housing companies that offer interest-free loans for Muslims back home. I did not want to go through middlemen in banks to ensure I fully complied,” he says.
For, now, Gamadid is on his way into owning a home after settling on one through a plan that subscribes to his religious beliefs.
He is only one of many exploring the market for products that fit their requirements. Apart from banks, who offer Sharia compliant loans and mortgages that are mainly taken up by the upper middle class, the lower income earners have lagged behind when it comes to buying homes.
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According to Adrash Hussein of Rama Homes Limited, a Sharia compliant real estate company that started early this year, banks have been offering Diminishing Musharakah, which is based on Sharia law.
Few real estate companies had come out to do homes that are interest free and in total compliance to the Sharia Law, before Rama Homes entry into the housing market.
Husseing says that in Diminishing Musharakah, which is popular in banks, rent is charged after the customer has taken over the asset without accruing any interest attached to them. “Banks offer Sharia compliant loans and mortgages without interest. However, they are expensive as a home financing plan since most of the time they end up charging the client a double the market price of the property or asset on sale, which proves to be quite expensive,” he says.
“Also, more interesting is that the property is jointly owned jointly by the bank and the client until they complete paying,” Hussein says.
According to him, through the Diminishing Musharakah which is more less like a mortgage, units purchased are literally owned by the bank and then when the home buyer takes the unit, it is, like, rented out to them through Ijarah which is an Islamic form of lease agreement.
Change of focus
Apart from banks, there is also a number of real estate companies that offer attractive off-plan home buying solutions but not all of them are Sharia compliant due to the interest attached to them which makes them equally expensive.
“We are now focusing on low-cost housing models that are sharia compliant to tap on this lower middle class Muslim market which has been missing on the card,” Hussein says.
He says their concept is attracting attention: “This year, our low cost housing project the ‘Euromax project’ a 50 units 3-bedroom housing unit in South C which was selling at Sh8million and Sh10 million was taken up within a month. We have also seen much interest especially from the diaspora clients in our upcoming projects in areas like Westlands and South C which are low cost housing projects.”