The evidence is not conclusive but does point to a correlation as demonstrated by Saudi Arabia, Iran and to a certain extent, Brunei.
In Malaysia currently there has been some effort by the Pan Islamic Party (PAS) to pass Syariah laws using hudud as sanctions and penalties. Hudud is an Islamic concept: punishments which under Islamic law or syariah are mandated and fixed by God.
The syariah divides offences into those against God and those against man. Crimes against God violate His Hudud or ‘boundaries’. These punishments are specified by the Quran, and in some instances by the Sunnah. They are namely for adultery, fornication, accusing someone of illicit sex but failing to present four eyewitnesses, apostasy, consuming intoxicants, outrage (e.g. rebellion against the lawful Caliph, other forms of mischief against the Muslim state, or highway robbery), robbery and theft. Hudud offences are overturned by the slightest of doubts (shubuhat). These punishments are rarely applied in pre-modern Islam.
These punishments range from public lashings to public stoning to death, amputation of hands and crucifixion. The crimes against hudud cannot be pardoned by the victim or by the state, and the punishments must be carried out in public.
However, the evidentiary standards for these punishments are often impossibly high, and they are thus infrequently implemented in practice. Moreover, the Islamic prophet Muhammad ordered Muslim judges to ‘ward off the Hudud by ambiguities’. The severe Hudud punishments are meant to convey the gravity of those offences against God and to deter, not to be carried out.
In most Muslim nations in modern times, public stoning and execution are relatively uncommon, although they are practised in Muslim nations that follow a strict interpretation of Syariah, such as Saudi Arabia and Iran.
Hudud is not the only form of punishment under syariah. There are two others: Qisas, certain occasions of retaliation as a punishment in a private dispute between two parties; and Tazir, a punishment left to an Islamic judge’s discretion in some circumstances.
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Thus, the issue of hudud and real estate market are seemingly distinct and separate, but they do have a correlation with respect to prices of properties.
BRUNEIAN EXPERIENCE
Brunei is a good case study of how property prices have been affected by hudud. In 2012, the country passed laws for hudud punishment, as well as laws to allow only citizens to own real estate.
As a result, opportunities to invest in Brunei’s property market by Permanent Residents (PR) and foreigners living in the Sultanate have become unattractive since the 2012 law took effect. These groups of people have since been looking to buy overseas making it a profitable place to market overseas properties.
During the 8th Legislative Council (LegCo) in 2012, the Minister of Development at the time, Yang Berhormat Pehin Orang Kaya Indera Pahlawan Dato Seri Setia Awang Haji Suyoi bin Haji Osman, tabled legislation that effectively banned the purchase of property through a power of attorney (PoA) or trust deed. This was the system by which PRs and non-citizens had previously been able to buy property in the Sultanate.
The minister also announced that the more than 47,000 deeds previously issued through PoA would be converted into 60-year leases. The reasoning behind this legislation was to safeguard the interests of Bruneians and to ensure that the Sultanate’s land belongs to those who have the right to own it, the minister explained.
SILVER LINING
In every negative situation, there is always an opportunity. Many international property developers saw an opportunity to market to PRs and non-citizens. They initiated partnerships with Bruneian agents in order to sell to this group of buyers properties from neighbouring countries such as Malaysia, Singapore, Australia and the UK, according to comments made in 2015 to local media by real estate agent Amy Liew of BruWorld Real Estate and Property Management.
“We have seen a marked increase in the number of overseas property purchases made from Brunei, especially for the purpose of investment,” Liew was quoted to have said. “If you look into the converted 60-year lease lands today, they are no longer highly valued because of the short lease tenure. After 10 years, the value of the land will drop significantly”.
The possibility of this situation occurring was considered when the 2012 legislation was announced. A LegCo member warned at the time that the Sultanate could fail to benefit from investment if buyers decided to withdraw their money from Brunei due to uncertainty about property ownership rules.
CONFUSION REIGNS
The result has been general confusion for both PRs and foreign property owners. As of 2016, the rules for PRs state that they are allowed to buy land, houses and commercial shops for leases of up to 60 years while apartments can be owned for up to 99 years. Freehold property is absolutely denied for PRs and non-citizens. Yet, a number of questions remain.
PRs do not know if they will be able to retain their property for the use of future generations after the 60-year period expires. Nor do they know the start period of the lease – whether it started in 2012 or the year the property was originally purchased or when the new legislation is completed (no one knows yet).
The situation has been particularly difficult for foreigners who have for many years earned their livelihood in the Sultanate, residing there with their families and considering it their home. A country that introduces hudud therefore will find that there is a correlation to its real estate prices unless there is sufficient domestic demand to ignore foreign direct investments. However, my view is that in today’s globalized world, it is hard for countries to go the isolated way. Similarly for Iran and Saudi Arabia, their real estate market is not attractive for investments especially for foreigners. This may result in a brain drain of the talent pool.[/ihc-hide-content]
