Shariah-Compliant Housing: Opportunities and Challenges in Modern Markets

Noorsidi Aizuddin Mat Noor (Centre for Real Estate Studies, Mass Appraisal, Housing and Planning Research Group, Real Estate Department, Faculty of Built Environment and Surveying, Universiti Teknologi Malaysia, 81310, Johor Bahru, Malaysia)
Farhana Diana Deris (Faculty of Social Sciences and Humanities, Universiti Teknologi Malaysia, 81310, Johor Bahru, Malaysia)
Mustafa Omar (Real Asset Research Group, Universiti Teknologi Malaysia, Johor, Malaysia, Malaysia,)
Hamdi Abdul Hamid (Land Administration and Development Studies Research Group, Real Estate Department, Faculty of Built Environment and Surveying, Universiti Teknologi Malaysia, Johor, Malaysia,)
Afizan Mokhtar (College of Built Environment, University Technology of Mara, 40450 Shah Alam, Selangor)

Indonesian Journal of Islamization Studies
Vol. 2 No. 1 (2024): Indonesian Journal of Islamization Studies (INJAS)

This study examines the market potential and challenges of Shariah-compliant housing, which follows Islamic principles by avoiding interest (riba), gambling (maysir), and excessive uncertainty (gharar). With the global Muslim population growing and demand for Islamic value-aligned products increasing, there is a notable gap in awareness and understanding of Shariah-compliant housing among buyers and investors. Focusing on Malaysia, where the Muslim population is substantial and Islamic financial infrastructure is advanced, the study employs a mixed-method approach. Surveys of 150 Muslim respondents assess consumer preferences, while interviews with industry experts explore supply-side challenges. Findings indicate strong interest in Shariah-compliant housing, with 78% willing to pay a premium. However, barriers such as limited awareness, inadequate Shariah-compliant financing, and unclear regulations remain. The study suggests that addressing these issues through education, clearer regulations, and alternative financing is essential for market growth.