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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