Sukuk Market to Grow with a CAGR of 12.6% Globally through 2029

The global sukuk market has experienced significant growth, driven by increasing demand for Islamic finance. Sukuk issuance has diversified, attracting diverse investors, and contributing to Islamic finance's global prominence.

According to TechSci Research report, “Global Sukuk Market - Industry Size, Share, Trends, Competition Forecast & Opportunities, 2029”, the Global Sukuk Market stood at USD 1021.6 billion in 2023 and is anticipated to grow with a CAGR of 12.6% in the forecast period, 2025-2029. The global sukuk market exhibits dynamic growth driven by factors such as the increasing popularity of Islamic finance, diversification of issuers, global investor interest, financing infrastructure needs, and regulatory support. Sukuk structures are diversifying, incorporating green and sustainable elements. Technology integration, cross-border issuance, and the impact of Islamic fintech are prominent trends. Challenges include the lack of standardization, limited secondary market liquidity, regulatory and tax complexities, and educational gaps. As a versatile Islamic financial instrument, sukuk plays a crucial role in meeting the diverse financing needs of governments, corporations, and financial institutions worldwide.

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The global sukuk market is propelled by several compelling drivers that collectively contribute to its robust growth and increasing prominence in the international financial landscape. One pivotal factor fueling this expansion is the escalating popularity of Islamic finance principles globally. Investors, both Islamic and non-Islamic, are increasingly drawn to financial instruments that adhere to Sharia principles, emphasizing ethical and socially responsible investment practices. This rising demand not only fuels the growth of the sukuk market but also reflects a broader global trend towards incorporating ethical considerations into investment portfolios.

The diversification of issuers is another critical driver influencing the global sukuk market. While sovereigns have traditionally dominated sukuk issuances, there has been a noticeable shift with corporations and financial institutions increasingly turning to sukuk to meet their funding needs. This broadening base of issuers enhances the market's depth, making it more resilient and attractive to a diverse range of investors. The corporate sector's embrace of sukuk issuance highlights the versatility and adaptability of this Islamic financing tool, positioning it as a viable option for a wide array of entities seeking capital.

Global investor interest is a key driver that has significantly contributed to the growth and globalization of the sukuk market. Investors, including Islamic banks, institutional investors, and sovereign wealth funds, are attracted to sukuk for its stability, predictable returns, and adherence to Sharia principles. This interest extends beyond traditional Islamic finance hubs, with non-Muslim-majority countries in Europe and Asia actively participating in sukuk issuance. The global appeal of sukuk underscores its status as a mainstream financial instrument with cross-border significance, providing a platform for diverse investors to participate in Islamic finance.

The need for infrastructure and economic development is a driving force behind the sukuk market's expansion. Governments in emerging markets, particularly those with a strong Islamic finance presence, recognize sukuk as an effective means to finance critical infrastructure projects. Sukuk issuance has been instrumental in funding projects such as roads, bridges, airports, and utilities, addressing infrastructure gaps that hinder economic development. The alignment of sukuk with sustainable and responsible financing further enhances its appeal in supporting projects with positive social and environmental impacts.

Regulatory support and standardization are pivotal drivers shaping the global sukuk market. Regulatory frameworks play a crucial role in providing a conducive environment for sukuk issuance, ensuring legal clarity and investor protection. Many countries with a significant Islamic finance presence have enhanced their regulatory frameworks to accommodate and support sukuk issuance. Efforts towards standardization, led by organizations such as the International Islamic Financial Market (IIFM) and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), have been instrumental in streamlining sukuk structures, contributing to market maturity and efficiency.

Major companies operating in Global Sukuk market are:

• Abu Dhabi Islamic Bank PJSC
• Al Baraka Banking Group
• Al-Rajhi Bank
• Banque Saudi Fransi
• Dubai Islamic Bank
• HSBC Holdings Plc
• Kuwait Finance House
• Malayan Banking Berhad
• Qatar International Islamic Bank
• RHB Bank Berhad

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“The global sukuk market is thriving due to increasing demand for Islamic finance, a diversifying pool of issuers including corporations and governments, and global investor interest. Infrastructure needs, regulatory support, and efforts towards standardization further drive its expansion. Sukuk's adaptability, ethical foundations, and appeal to diverse investors position it as a mainstream financial instrument, contributing to its dynamic growth and prominence in the international financial landscape.” said Mr. Karan Chechi, Research Director with TechSci Research, a research-based management consulting firm.

“Sukuk Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Sukuk Type (Murabahah Sukuk, Salam Sukuk, Istisna Sukuk, Ijarah Sukuk, Musharakah Sukuk, Mudarabah Sukuk, Others), By Currency (Turkish Lira, Indonesian Rupiah, Saudi Riyal, Kuwaiti Dinar, Others), By Issuer Type (Sovereign, Corporate, Financial Institutions, Quasi-Sovereign, Others), By Region, By Competition, 2019-2029, has evaluated the future growth potential of global Sukuk market and provides statistics & information on market size, structure and future market growth. The report intends to provide cutting-edge market intelligence and help decision makers take sound investment decisions. Besides, the report also identifies and analyzes the emerging trends along with essential drivers, challenges, and opportunities in the global Sukuk market.

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