Persian Gulf Islamic bond issuers are avoiding collateral based on real estate after Dubai property prices plunged 50 percent.
Debt linked to returns from oil fields, aluminum and manufacturing plants are more popular with investors than property, Moinuddin Malim, chief executive officer at Dubai- based Mashreq Al Islami, said in an interview in Abu Dhabi on Oct. 11. “Money-making assets provide investors more comfort.”
Real-estate prices in Dubai tumbled from their peak in August 2008 after the worst economic crisis since the 1930s forced banks to tighten lending, according to Colliers International. Property, which has been used to back a $3.5 billion note by Nakheel PJSC, is typically leased out and payments to investors are usually in the form of rental income or profit streams.
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