UAE Sukuk Market Thrives with 16% Islamic Finance Asset Growth in Early 2025

The UAE’s sukuk market is flourishing in 2025, with Islamic finance assets growing 16% year-on-year to over $300 billion in Q1. Sukuk issuances jumped 28% to $6.5 billion in the first four months, outpacing conventional bonds, as the UAE solidifies its role as a global Islamic finance hub.

Government Strategy Fuels Growth

The UAE’s new Islamic finance strategy, approved in 2025, targets doubling Islamic banking assets to AED 2.56 trillion by 2031 and increasing local sukuk issuances to AED 660 billion. International sukuk listings aim to hit AED 395 billion, supported by a Central Bank-led committee.

Nasdaq Dubai Leads Sukuk Listings

Nasdaq Dubai remains the world’s largest sukuk exchange, with $98.9 billion listed by December 2024. Recent issuances include Mashreq Bank’s $500 million, 5-year sukuk in June 2025, offering a 5.03% profit rate, reflecting strong investor confidence.

Sustainable Sukuk Gains Traction

Green sukuk issuance continues to drive growth, with the UAE ranking second globally in sustainable sukuk in 2024. Despite a 60% drop from 2023’s peak, $11.9 billion was issued, with 2025 projections at $10–12 billion, aligning with sustainability goals.

T-Sukuk Auction Success

The UAE Ministry of Finance’s May 2025 T-Sukuk auction issued AED 1.1 billion, attracting AED 6.93 billion in bids, a sixfold oversubscription. This underscores investor trust in the UAE’s fiscal health and Islamic finance framework.

Tokenized Sukuk on the Rise

The UAE is pioneering tokenized sukuk, with Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC) introducing digital asset regulations. A 5–10% shift to tokenized sukuk by 2025 could drive billions in digital asset flows.

Outlook for 2025

S&P Global Ratings predicts global sukuk issuance of $190–200 billion in 2025, with the UAE as a key player. Despite challenges like AAOIFI Standard 62 complexities, the UAE’s sukuk market is set for high single-digit growth, supported by a robust non-oil economy.