Though the majority of real estate purchases are now investment based, it won't be long before the demand for Islamic mortgages rise as there will be tight budgetary constraints in the near future. They run an Ijara Financing Scheme in conjunction with Citibank where investors, through leasing agreements, buy properties in the United States and United Kingdom. Another launch, of the Al Deara Real Estate Fund, is also on the cards. A Sharia committee has also been established to oversee the fledgling bond market as Sharia-compliant bonds have been fraught with legal difficulties in the past. The offer of Sharia compliant services by non-Islamic banks has intensified pressure on Islamic banks as they try to compete in an increasingly regulated global environment.
Islamic banking is like any other banking business and the same market forces apply.
My experience of the market in South Africa confirmed my view that while Muslims are very keen to place their savings according to Islamic principles, they would rather save with major Western banks. A major UK bank or building society that provides such products would soon capture the lion's share of a grateful and loyal consumer base. Analysts therefore predict that over the next few years, mergers of Islamic banks will be a definite possibility as they consolidate their market share, improve efficiency and allow stricter regulation of their affairs. Islamic banking is equally attractive to borrowers and depositors. Interest-free loans based on the expectation of profit and the market cost of funds allow flexibility for the borrower.