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French Version

GCC mortgage market set to boom

Experts say value of properties exceeds $750 billion

The domestic home finance market in the GCC, currently estimated at a conservative $750 billion, is expected to broaden and deepen considerably in the near future, said Mohammad al-Hashimi, CEO, Amlak Finance, the pioneer in Islamic home finance in the region. "The U.K. mortgaged property market is valued at $1 trillion, with a population of 55 million. Extrapolate this ratio to the GCC, and the property market has the potential to be worth $750 billion," he said.

Hashimi also emphasized that the flexibility and innovation shown by the financial services industry in structuring Islamic-compliant instruments to raise debt and capital, would ensure that Islamic finance will be the repayment method of choice for the homeowner in the near future.

Hashimi was speaking at the recently concluded Islamic Real Estate Finance Middle East Conference (IREF ME 2005), which focused on the ongoing boom in the GCC real estate markets and the increasing use of Islamic financing structures to satisfy investment objectives in the real estate sector.

In recognition of AMLAK Finance's success in this market, the company was given an award for finest services in the U.A.E. in the Islamic Banking Category, at the "Excellence in Real Estate" Awards organized by Islamic Conferences Group (ICG) alongside IREF ME 2005.

"A significant percentage of investment in the GCC is being channelled into the real estate sector, as is evident from the ongoing boom in the region's real estate markets," said Hashimi in his remarks at the conference. "Islamic finance has played a major role in fueling this growth because of the innovative and flexible Sharia-compliant solutions being devised by the financial services industry to create extensive opportunities for the highly liquid pool of Islamic funds. This has resulted in a fourfold increase in issued sukuks in 2004 over 2003, raising an estimated $7billion in total," he added.

"As international investors begin to mention Gulf properties in the same breath as London, Hong Kong or New York, we believe that the moment has truly arrived for Islamic financing in the real estate market to take its place on the world stage," said Hashimi.

Citing the U.A.E. experience as an example, Hashimi explained that the factors essential to drive growth in the real estate sector include a benign legislative environment, and a flourishing local economy in addition to a popular desire to own property, and confidence in the security of the investment.

He declared that freehold would be the rule, rather than the exception across the GCC, as the neighboring countries have begun to witness the benefits that have accrued to Dubai from its liberalization of the freehold rules.

The three-day IREF ME 2005, which concluded today, brought together professionals and practitioners from the global real estate sectors as well as those from the conventional and Islamic financing industry. AMLAK Finance was a platinum sponsor for the event.

Beirut,12 20 2005
The Daily Star
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