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Housing and Housing Finance: Sharia-Compliant longterm funds and role of Islamic-REITs

The world’s biggest concern today is the burden of fast increasing population, as Malthusian Theory on population growth is visibly proving to be so true. With around 7.55 billion people presently living on face of the earth, the habitable land on the globe is already over populated and density is increasing in terms of
Persons/Sq.KM. By year 2050 the world population is projects at 9.726 billion, with more than half ((54%) will be Asians or one out of two people on the planet earth.

SOCIAL HOUSING Definition and Characteristics

A house provided for people with low income or with particular needs, by government agencies or non-profit organizations. A houses or apartments that are made available to be rented at a low cost to poor people. Any Government-subsidized housing and local council housing are now often referred to as “social housing”.  Social housing is an umbrella term referring to rental housing which may be owned and managed by the state or by any non-profit organizations, or by a combination of the two usually with the aim of providing affordable housing. Social housing can also be seen as a potential remedy to housing inadequacy.


A robust financial sector is the key for any country to have sustained long term growth. Within the financial sector, housing finance is one of the fundamental pillars that support development of the economy, as housing and construction sectors are labor‐intensive and have backward and forward linkages with more than forty industries. In most developed countries, housing finance is one of the main drivers of the economy as its percentage to GDP is more than 50%; whereas in many developing countries it is around 15%. Moreover, in the South Asia region India has housing loans to GDP at around 9%; whereas, Pakistan lags behind almost all comparative economies at 1%. According to the 1998 Census the housing backlog was at 4.3 million units, which had estimated to reach a level of 6 million units in 2005. In addition to the backlog of 6 million housing units, the incremental housing need during 2005‐10 is estimated to be 3 million housing units.

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