Shariah Loans Reach Five-Year Low on Property: Islamic Finance - BusinessWeek

Shariah-compliant loans slumped to a five-year low in Europe, the Middle East and Africa in the first half on credit-ratings downgrades and falling property prices.

Islamic syndicated loans declined 40 percent to $2.2 billion, compared with a 5 percent drop in total lending to $304 billion, according to data compiled by Bloomberg. Real-estate prices have dropped 50 percent in the United Arab Emirates from their peak in August 2008, according to estimates from Colliers International.

“Banks have plenty of liquidity but they have been very selective when it comes to where they would like to deploy it,” Faisal Hijazi, the business development manager of rating services and Islamic finance in Dubai at Moody’s Investors Service, said in a July 1 interview in Kuala Lumpur. “Real- estate and investment companies seem to be the most seriously challenged when it comes to refinancing.”