Islamic bank loans $395 million

Abu Dhabi Islamic Bank (ADIB) has confirmed a US $395 million (AED 1.45 billion) financing agreement to support the development of Zayed University’s campus in Abu Dhabi.

The agreement was signed with a joint venture between Al Habtoor Engineering and Murray Roberts who will be contractors on the $817 million project, said a company statement.

The announcement comes at a quite time for the GCC’s property sector with projects struggling for finance as banks tighten their belts during the economic crisis.

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Pinsent Masons, a partner in construction law firm Sachin Kerur, said many in the industry are now looking towards Islamic banks who in general have suffered less from the crisis due to their stringent lending policies.

"The project finance market has taken a real hit,” he said.

“Can Islamic financed projects fill the gap? I doubt that they can fill the gap in its entirety because it’s a huge amount of money, but it could probably go some way."

The chairman of Al Habtoor Leighton Group chairman, Riad Sadik, said ADIB was an ideal choice to support their joint venture.

“Both the bank's experience in structuring Islamic financing deals and the level of service they provided to us helped to make a complicated process easier," he said.

The development of the university campus, which is being overseen by Mubadala, is expected to be completed by the end of 2011.

Cansult Maunsell is the appointed engineering and design services firm to the project.