Now that the Dubai property market bubble and bust is largely in the rear view mirror, there have been institutional changes to limit the prospects of a bubble from reoccurring. These include banks increasing their review process, increased government regulation of the share of assets any bank can have exposure to and also a thus-far mooted effort to limit the maximum loan-to-value limits for real estate.
In a recent interview, Faisal Aqil, deputy CEO of Emirates Islamic Bank said bluntly that a short-term profit tax was required in order to curb excessive speculation in the property markets. This isn’t the first such call to use taxes to quell speculation in markets, but his position in an Islamic banks raises the question of why there hasn’t been more of a call from Islamic bankers to limit speculative activity in property markets, because they are supposed to avoid financing speculative investments like short-term ‘flipping’ of property.
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