JEDDAH – GCC countries are set to see significant growth in the Islamic mortgage sector, as, with 65 percent of the population under the age of 30 demand for affordable housing is predicted to soar.
Qatar and Saudi Arabia are expected to experience higher growth than other markets due to increased economic activity, and demand is also expected to expand in Oman, as three Islamic banks have recently been licensed to operate in the sultanate.
Islamic mortgage financing has developed quite quickly in the region during the last few years, especially when compared with conventional mortgage providers with companies such as Deutsche Housing Finance, Sakana Holistic Housing Solutions and Saudi Home Loans Company coming to the fore. Islamic mortgages are also becoming easier to understand and far more acceptable.
Many Islamic mortgage providers are attracting customers from all religions due to the value offered by their products.
Another factor involved in the growth of Islamic mortgages is the advent of freehold property, which was a new concept until the early when emerging markets like Dubai, Bahrain, Oman and Qatar brought it forth.
Before this time ownership was restricted to nationals with mortgage financing being provided primarily through state run housing banks.
The recent global financial crises has changed the sentiment for finance and investments. An increased appetite for Islamic Private Equity has surfaced with its own challenges and trends.
Joined by over 50 expert regional and global speakers, Ihab Asali, QFIB Head of Private Equity, said at the recently concluded Islamic Investment and Finance, that “The growth of Islamic Private Equity comes at a time when there is a controversy over the credibility of the conventional financial system. Islamic Private Equity is the purest form of Shariah-compliant financing since it is structured on a partnership basis. We will continue to see an increased focus on the value and potential contribution of Islamic Private Equity as new markets emerge,” said Ihab Asali, QFIB Head of Private Equity.
Investments in the European and North American markets greatly suffered in the 2008 economic meltdown. Fresh start ups GPs were also affected in the MENA region. It took investors time to analyze and react to devaluations in the net asset value from their investment commitments prior to the crisis. The key challenge now is to create the right environment to encourage LPs in the Middle East markets to go back to investing again and capture growth opportunities in markets like North Africa, GCC and Turkey.”
“There is no doubt that there is a huge potential for growth in the Islamic Finance arena since today Islamic assets represent less than 1 percent of total global assets. High Muslim populated countries, like Turkey provide great opportunities for Islamic financing in general and Islamic Private Equity in particular,” Asali added. – SG/QJM