Sukuk Market Report 2025

The sukuk market size has grown rapidly in recent years. It will grow from $1.08 trillion in 2024 to $1.29 trillion in 2025 at a compound annual growth rate (CAGR) of 19.8%. The growth in the historic period can be attributed to islamic finance growth, diversification of funding sources, infrastructure development, government initiatives, global sukuk issuance, increased cross-border transactions.

The sukuk market size is expected to see rapid growth in the next few years. It will grow to $2.54 trillion in 2029 at a compound annual growth rate (CAGR) of 18.5%. The growth in the forecast period can be attributed to global economic recovery, belt and road initiative, sustainable and green sukuk, islamic fintech growth, diversity of sukuk structures, wealth management demand. Major trends in the forecast period include innovation in sukuk structures, digitalization of sukuk issuance, enhanced regulatory frameworks, partnerships and cross-border collaboration, private sector participation.

The forecast of 18.5% growth over the next five years reflects a slight reduction of 0.1% from the previous projection. This reduction is primarily due to the impact of tariffs between the US and other countries. This is likely to directly affect the US through reduced issuance of Islamic bonds, as Sharia-compliant structuring tools and profit distribution calculation systems, predominantly sourced from Malaysia and the United Arab Emirates, face higher implementation costs. The effect will also be felt more widely due to reciprocal tariffs and the negative effect on the global economy and trade due to increased trade tensions and restrictions.

The swift urbanization occurring in Middle Eastern countries is anticipated to drive the growth of the sukuk market in the future. Urbanization refers to the gradual shift of a nation's population from rural to urban areas, leading to a faster increase in the proportion of urban residents compared to rural residents. This urbanization generates a demand for infrastructure investment, which in turn fuels economic growth through various means, including reducing transaction costs and enhancing productivity. In the realm of infrastructure development, sukuk serves as a popular and highly effective method for governments to raise funds both locally and internationally through a sharia-compliant process that avoids interest payments for national development. For example, in June 2024, the Baker Institute, a U.S.-based non-profit government organization, reported that the population of Arab countries reached around 465 million. The region's urban population is projected to grow from 279 million to approximately 362 million by 2035. This growth necessitates investments in education, infrastructure, and governance frameworks to create an environment favorable for sustainable urban development. Thus, the rapid urbanization in Middle Eastern countries is propelling the growth of the sukuk market.

The sukuk market is expected to experience growth fueled by the increasing demand for Islamic finance. Islamic finance involves managing money and financial activities in adherence to the moral principles and practices of the Islamic religion. Sukuk, as a component of Islamic finance, offers a Sharia-compliant financing option, promotes risk-sharing, facilitates infrastructure development, and provides opportunities for global growth and diversification of funding sources. According to S&P Global in October 2022, the global Islamic finance industry is projected to expand by 10%-12% in 2021-2022. Additionally, the takaful sector is expected to see a rise of 5%-10%, and there may be some growth in the funds business as investors seek yield. This growing demand for Islamic finance plays a pivotal role in driving the growth of the sukuk market.

Leading companies in the sukuk market are concentrating on sustainable and innovative financial instruments, such as green and social sukuk, to engage a wider array of ethical investors while supporting initiatives that align with environmental and social objectives. A Sharia-compliant investment fund is a financial instrument that follows Islamic law, which prohibits interest and invests in ethical enterprises while avoiding sectors related to alcohol, gambling, and other forbidden activities. For example, in September 2024, Al Baraka Capital, an Islamic financial services company based in Bahrain Bay, introduced the first Sharia-compliant investment fund with USD 4.11 million (EGP 200 million) in financing for 20 small businesses in the industrial sector in exchange for a share of the revenues. This fund employs Sukuk, which are Islamic financial certificates akin to bonds but compliant with Sharia law. Sukuk signify ownership in tangible assets or projects, enabling investors to earn returns without contravening Islamic prohibitions against interest (riba).

Innovation in financial instruments is a key focus for major companies in the Sukuk market, with the introduction of innovative solutions such as Sukuk ETFs to enhance their market presence. Sukuk ETFs are exchange-traded funds that track the performance of a sukuk index, offering investors exposure to the sukuk market. In September 2023, HSBC Asset Management launched the HSBC Global Sukuk UCITS ETF, Europe's first global sukuk ETF. This ETF, listed on the London Stock Exchange, tracks the FTSE IdealRatings Investment Grade index, providing global exposure to sukuk or Islamic bonds. With a total expense ratio (TER) of 0.70%, HSBC aims to meet the growing demand for Islamic passive products worldwide, catering to both standalone investments and components of larger multi-asset portfolios adhering to Shariah principles.

In October 2022, AI Rajhi Bank Malaysia (ARBM), a Saudi Arabian bank, forged a partnership with Nomura Asset Management Malaysia for an undisclosed amount. This collaboration is geared towards achieving the status of Malaysia's leading Islamic innovation bank, offering Shariah-compliant investments. Nomura Asset Management Malaysia Sdn Bhd, a Malaysia-based investment management firm, contributes to this strategic alliance, emphasizing the evolving landscape of Islamic finance.

Major companies operating in the sukuk market include Abu Dhabi Islamic Bank PJSC, Al Baraka Group BSC, Al Rajhi Bank, Banque Saudi Fransi, Dubai Islamic Bank, Hongkong and Shanghai Banking Corporation, Kuwait Finance House, Malayan Banking Berhad, Qatar International Islamic Bank, Ajman Bank, Citi Islamic Investment Bank, Emirates NBD Bank PJSC, Standard Chartered plc, Qatar Islamic Bank, First Abu Dhabi Bank, Gulf International Bank, Islamic Development Bank, Kuwait International Bank, Mashreq Bank, Oman Arab Bank, Sharjah Islamic Bank, Alinma Bank, Bank AlJazira, Bank Islam Brunei Darussalam, Bank Muamalat Malaysia Berhad, Bank Negara Indonesia, Bank of London and The Middle East, Dubai Financial Market, Islamic Financial Services Board, Nasdaq Dubai, London Stock Exchange.

Saudi-Arabia was the largest region in the sukuk market in 2024. The regions covered in the sukuk market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa. The countries covered in the sukuk market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

Note that the outlook for this market is being affected by rapid changes in trade relations and tariffs globally. The report will be updated prior to delivery to reflect the latest status, including revised forecasts and quantified impact analysis. The report’s Recommendations and Conclusions sections will be updated to give strategies for entities dealing with the fast-moving international environment.

The sharp rise in U.S. tariffs and the ensuing trade tensions in spring 2025 are having a considerable impact on the financial sector, particularly in the areas of investment strategies and risk management. The increased tariffs have intensified market volatility, leading institutional investors to adopt more cautious approaches and driving greater demand for hedging solutions. Banks and asset managers are encountering higher costs in cross-border transactions as disrupted global supply chains and declining corporate earnings weigh on equity market performance. At the same time, insurance providers are facing elevated claims risks linked to supply chain interruptions and trade-related business losses. Furthermore, reduced consumer spending and weaker export demand are limiting credit growth and dampening investment appetite. In response to these challenges, the sector must focus on diversification, accelerate digital transformation, and strengthen scenario planning to manage the heightened economic uncertainty and safeguard profitability.

An Islamic financial instrument known as a sukuk, or commonly referred to as an 'Islamic bond' or 'sharia-compliant bond,' represents an ownership stake in a permissible portfolio of existing or future assets. Its primary purpose is to generate capital for a business entity.

Various types of sukuk exist, including murabahah sukuk, salam sukuk, istisna sukuk, ijarah sukuk, musharakah sukuk, mudarabah sukuk, hybrid sukuk, among others. For instance, murabahah sukuk is a form of Islamic financing wherein the buyer and seller agree on the cost and markup of an asset, enabling the purchase and resale of an item at a mutually agreed-upon price inclusive of profit. These sukuk are transacted in major currencies such as the Turkish lira, Indonesian rupiah, Saudi riyal, Kuwaiti dinar, Malaysian ringgit, United States dollar, and others. They are issued by various entities, including sovereign bodies, corporations, financial institutions, quasi-sovereign organizations, and others in the financial landscape.

The sukuk market research report is one of a series of new reports that provides sukuk market statistics, including the sukuk industry global market size, regional shares, competitors with a sukuk market share, detailed sukuk market segments, market trends and opportunities, and any further data you may need to thrive in the sukuk industry. This sukuk market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenario of the industry.

The sukuk market consists of sales of true certificates, alternative civil law structures, investors’ credit exposure, and asset-backed. Values in this market are ‘factory gate’ values, that is the value of goods sold by the manufacturers or creators of the goods, whether to other entities (including downstream manufacturers, wholesalers, distributors and retailers) or directly to end customers. The value of goods in this market includes related services sold by the creators of the goods.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD, unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

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