Islamic Mortgage Dubai
The ISLAMIC MORTGAGE is designed to achieve its economic objectives while complying with sharia laws, unlike some other non-Islamic states like US or UK where their indigenous law can be used for Islamic finance without considering the effect of sharia law.
The Islamic mortgage Dubai which comprises the finance and real estate management system has developed rapidly over the years and has extended its activities beyond United Arab emirate. Amidst this development, their activities are hindered by some internal crises predominantly in Dubai.
At the end of the 2000s the annual growth rate of Islamic finance increased sporadically with annual growth rate of approximately 20%. Despite these increase, the conflict between conventional finance and Islamic finance was still on the increase. Islamic mortgage Dubai finance prohibits the charging of interest in accordance with the teaching of the Islam (sharia law). But these teaching when compared to the ISLAMIC MORTGAGE on real estate management makes impossible for dealers on real estate management to make a due profit. The Islamic law prohibits a fixed interest rate, rather depositors receive a slice of the banks’ profits and theoretically makes losses.
But in reality, Islamic bank ensures that customer’s deposit is not compromised. In order to achieve these, they set a profit equalization reserve which acts as a fall back option against losses.
The annual report published in 2012 shows that the activities of Islamic bank compose of 22% to 78% of the national banks. The fit Islamic bank’s achievement marveled everyone because they were introduced in the late 2000s.
It has exerted enough pressure and gained market recognition all over the world especially in Islamic nations. This is to say that considering the number of years spent in the banking sector and forecasting into the future, the Islamic bank will be dominating the banking industry. Despite the observed progress, the real estate sector has the majority say when analysis of the balance sheet of most banks is done.
Islamic mortgage Dubai as a subset of ISLAMIC MORTGAGE adopts strictly the principles of the sharia law, unlike the conventional real estate investments. The aspect of the utilization of the real estate including tenancies and sub-tenancy, financing of acquisition and development and insurance scheme for protecting the real estate should all be in sharia law.
The Islamic price on mortgage estates investment faces some challenges which are obtainable virtually in all mortgages. They are the non-facilitating taxation and regulatory framework in some jurisdiction. All the risk attached to real estate are managing risk, tenancy and sub tenancy risk, external risk and risk relating to properties. Islamic mortgage Dubai has attained a great height which includes sustainable growth prospects and underlying quality real estate, diversification of assets and investment planning which is usually long-term, thus enabling growth in assets value enhancement.
The managerial aspect of Islamic real estate shares some qualities which are being result oriented, effective management teams, strong sharia governance and transparency to investors. An Islamic finance mortgage in Dubai “Noor Islamic” now offers Islamic mortgage Dubai properties to non UAE residents and receive profit rate of 5.75 percent which differs from the profit rate charged on residents. Apparently, the price of property increased by more than 30% that year because of increase in population caused by immigration and increased the birth rate.
The ISLAMIC MORTGAGE RATE tends to strike the balance between the finance of Islamic mortgage Dubai and its real estate at an affordable price/ rate. The Dubai’s mortgage works on the principle of sharia law, and it could be found in “ manzili home” finance which adopts a rate as low as 3.49 per annum. Islamic mortgage Dubai can operate in either Murabaha contract or diminishing musharaka contract, either of the two ISLAMIC MORTGAGE LOAN platform does not allow the extortion of her customers. The Islamic mortgage Dubai, unlike every other mortgage system, has a difficult stamp duty tax land (SDTL) on real estate. They charge twice of what is obtainable in other countries mortgage policies. This made the US in 2003 to eliminate the SDTL system adopted by the mortgages.
Petrodollar gushing into the Middle East contributed immensely to the growth of Islamic bank in recent years. After 2009 financial crisis, the majority of the Islamic banks remain stable, unlike the western conventional financial institutions. Al Rajhi Bank in Saudi Arabia (largest Islamic Bank) performed better than most prominent banks like Citi groups Barclay and Royal Bank of Scotland.
The sharia law made most Islamic bank to be operating on stable deposit bases, no or little leverage, few desk for trading and no exposure to toxic asset. The sharia law has been unfavorable to real estate because it abides with the guiding principles of Islam, which includes the underline physical assets in all transaction. Some other investments are regarded as out of the band because of the prohibition of non-interest and gambling.
Sharia complaints is a word used to describe when the Islamic finance has violated the sharia principles/laws. Prior to sharia compliance, a Scottish law will be used to preside a contract made between UK customers and UK Islamic bank. Islamic contract made within any state will preside bylaw governing the state where the property is located. As stated above, real estate has its transfer tax charges. The UK system is called the stamp duty land tax.
The Islamic bank mortgage is costlier than conventional mortgage because the Islamic mortgage Dubai finance charges tax twice, at the initial point of purchase and at the end point of sale. In an economic system where money flows from Islamic mortgage finance to the conventional mortgage finance and vice versa, the Islamic finance pricing is determined by the by interest on conventional mortgage finance. Arbitrage opportunities which can damage the Islamic finance sector are created when the price for conventional money is different from Islamic money. The size of the Islamic finance is small when compared to conventional finance, these make it to lack economies of scale which the other enjoys in the form of a reduction in the non-interest cost such as staff and technology cost.
The Islamic finance and real estate are not in isolation because they adopt the same guiding principles. The finance of the Islamic mortgage Dubai is growing but has less contribution from the real estate owing to low interest on assets and sticky principles of sharia law on mortgages.
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