The Guidelines for Islamic REITs stipulated the general Syariah-compliance requirements in respect of all Islamic REITs which include the following (Securities Commission 2005):
● Rental incomes are derived from permissible business activities according to Syariah. In the case where a portion of the rental is from non-permissible activities, then these rentals shall not exceed 20% of total turnover of the Islamic REIT.
● An Islamic REIT is not permitted to own properties where all the tenants operate nonpermissible activities.
● For new tenants, the Islamic REIT shall not accept new tenants whose activities are fully non-permissible.
● For tenants who operate mixed activities, only 20% of the floor area can be occupied for non-permissible activities to the total area occupied.
● For activities that do not involve the usage of space, the Syariah committee/Syariah adviser will base their decision in ijtihad (the process of reasoning by Islamic jurists to obtain legal rulings from sources of Syariah).
● All forms of investment, deposit and financing instruments comply with the Syariah principles.
● The property insurance must be based on Takaful schemes. Conventional insurance schemes are permitted if the Takaful schemes are unable to provide the insurance coverage.
