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  • Valuation of Real Estate Activities

    • CA-9.1.13

      The measurement of risk exposures in real estate activities is dependent on sound and proper valuations as outlined in Chapter CM-2 of this Rulebook. The risks inherent in the real estate activities depend on a number of factors, including the type of property and the independent parties who will assess these activities. Islamic bank licensees must have in place adequate valuation rules and proper valuation methodologies.

      January 2015

    • CA-9.1.14

      Islamic bank licensees must value their property activities on a consistent basis. Otherwise, there can be no level playing field for capital adequacy treatment. In the case of assets under Murabahah or Ijara/IMB transactions, the Islamic bank licensee must employ appropriate valuation to estimate the amount for which a property switches from investment to financing, or vice versa.

      January 2015

    • CA-9.1.15

      The valuation of an Islamic bank licensee's real estate investments is subject to the rules in Module CM. Islamic bank licensees must have robust procedures to substantiate the results of valuations while comparing them with some independent information source such as property market reports or reliable publications. Islamic bank licensees should scrutinise any significant variations in these valuations and make any necessary rectifications.

      January 2015