In the next few months, Saudi Arabia will move forward in pushing the frontiers of Shariah complaint lending/financing practices by issuing its first mortgage law. Bloomberg reports that the legislation will boost the real-estate industry and allow banks to diversify their balance sheets.

Apparently, Saudi Arabia’s property market is suffering from a shortage of housing units, shielding the kingdom from corrections in the real estate markets of other Gulf Arab states. Real estate prices in Dubai plummeted around 50 percent from their peak, according to Deutsche Bank estimates.

The Sharia-compliant legislation which has been discussed for the past two years will consist of five parts. It will define the terms of mortgages, how they are designed, how they are granted, how companies are licensed and how procedures will be enforced.

The legislation is on the way to the council of ministers before going to the Shura Council, the country’s consultative assembly, for final approval.

Full story, here: http://www.bloomberg.com/apps/news?pid=20601104&sid=afy6Vy3FViNg