Meezan Wealth Management founder, Rokibul Islam, said he is also expecting similar demand from skilled migrants and Islamic family members who wanted to pool funds in an SMSF to buy property.

“Up until now Islamic Australians who want to save for their retirement in an Islamic-compliant way could invest in Meezan’s Islamic superannuation fund which largely decides where their member’s money is invested in a Sharia-compliant way,” he said.

“With an Islamic SMSF they now have an alternative.”

The Islamic community in Australia is approaching one million people, and Islam said it overwhelmingly prefers to invest in property over any other asset class because of its physical nature and history of steadily increasing value.

However, borrowing money to buy property and paying interest was forbidden (riba) under Islamic finance (Sharia) principles.

He said Meezan Finance has since overcome this issue and can now provide funding that follows Islamic Musharaka principles. This means money borrowed to buy a property, which is placed in an SMSF, is repaid as rent and dividends rather than interest.

The SMSF initiative follows Meezan’s launch of a low-cost digital investing solution for the wider Australian Muslim community last year as part of a holistic approach to Islamic wealth management that also includes providing access to Islamic pensions, financial advice and retirement and estate planning.

“Islamic SMSF works on a number of different levels. Firstly, because buying property in Australia, particularly in Sydney was expensive, many Australian Muslims struggled to come up with the needed 20 per cent deposit,” Islam said.

“Because a single SMSF can have up to six members, family and friends can now pool their money to get a Sharia-compliant loan and buy an investment property held in an SMSF which they jointly control. Using this approach, Muslim investors can develop a property portfolio for long-term capital growth.”.

Islam added the amount investors can borrow is not determined by their income but rather by the size of the regular employer's compulsory superannuation and voluntary personal contributions to the SMSF fund.

“Rent from the property would be taxed at a flat 15 per cent rather than higher personal income or company tax rates and when the property is eventually sold for a greatly increased price it will be tax free as it will be free of capital gains tax,” he said.

“It is a religious, ethical and tax efficient win-win-win solution for Australian Muslims that was not available before.”