Emerging Trends to Drive Sukuk Market Growth at 18.5% CAGR Through 2029

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Sukuk Market Size Growth Forecast: What to Expect by 2025?
The size of the sukuk market has witnessed a swift expansion in the past few years. The market, which is expected to surge from $1080.62 billion in 2024, is predicted to reach $1295.08 billion in 2025, reflecting a compound annual growth rate (CAGR) of 19.8%. This enhancing trend during the historical period is attributable to factors including the burgeoning growth of Islamic finance, diversification of funding channels, infrastructural advancement, government-led initiatives, an influx in global sukuk issuances, and a rise in cross-border dealings.

How Will the Sukuk Market Size Evolve and Grow by 2029?
Anticipated to experience swift expansion in the coming years, the sukuk market size is projected to reach $2549.44 billion in 2029, exhibiting a compound annual growth rate (CAGR) of 18.5%. This projected growth within the forecast period can be credited to factors such as global economic recovery, the belt and road initiative, the advent of sustainable and green sukuk, growth of Islamic fintech, the diversity of sukuk structures, and the demand for wealth management. The forecast period is also expected to see trends such as novel innovations in sukuk structures, digital advancements in sukuk issuance, improved regulatory frameworks, cross-border collaborations and partnerships, alongside increased participation from the private sector.

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What Drivers Are Propelling the Growth of Sukuk Market Forward?
The swift progress of urbanization in countries within the Middle East is projected to boost the advancement of the sukuk market. The transition of the populace from rural regions to urbanities, with the percentage of urban dwellers increasing at a quicker pace than rural residents signifies the urbanization process. The requirement for infrastructure investment is generated by urbanization, leading to economic growth via numerous channels such as maximizing productivity and reducing transaction expenses. Sukuk serves as an exceptionally successful method for governments to generate funds both domestically and globally, adhering to sharia-approved protocols and without the need for interest payments for national development within the infrastructure sector. For example, as reported by the Baker Institute, a non-profit governmental organization based in the US, the populace of the Arab nations was around 465 million in June 2024. The urban populace in this region is estimated to elevate from 279 million to nearly 362 million by 2035. This calls for investment within education, infrastructure, and systems of governance to create a setting favoring consistent urban development. Consequently, the swift progress of urbanization in Middle Eastern regions fuels the advancement of the sukuk market.

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What Are the Key Trends Driving Sukuk Market Growth?
Leading businesses in the sukuk market are shifting their focus to sustainable and novel financial tools, such as green and social sukuk. These tools are aimed to appeal to a wider array of ethical investors and fund projects that align with environmental and societal objectives. A Sharia-compliant investment fund complies with the Islamic law Sharia, which forbids interest and encourages investment in ethically-approved enterprises while prohibiting engagement with businesses correlating to alcohol, gam*bling, and other activities deemed forbidden. In September 2024, for example, Al Baraka Capital, an Islamic financial services firm stationed in Bahrain Bay, initiated the first Sharia-compliant investment fund offering USD 4.11 million (EGP 200 million) in funding to 20 small industrial sector businesses in return for a share of the profits. The fund uses Sukuk, Islamic financial certificates akin to bonds yet adhering to Sharia law, symbolizing ownership in tangible ventures or projects, enabling investors to yield returns without infringing Islamic restrictions against interest (riba).

What Are the Key Segments in the Sukuk Market?
The sukukmarket covered in this report is segmented -

1) By Sukuk Type: Murabahah Sukuk, Salam Sukuk, Istisna Sukuk, Ijarah Sukuk, Musharakah Sukuk, Mudarabah Sukuk, Hybrid Sukuk, Other Sukuk Types
2) By Currency: Turkish Lira, Indonesian Rupiah, Saudi Riyal, Kuwaiti Dinar, Malaysian Ringgit, United States Dollar, Other Currencies
3) By Issuer Type: Sovereign, Corporate, Financial Institutions, Quasi-Sovereign, Other Issuer Types

Subsegments:
1) By Murabahah Sukuk: Commodity Murabahah Sukuk, Asset-Backed Murabahah Sukuk
2) By Salam Sukuk: Agricultural Salam Sukuk, Industrial Salam Sukuk
3) By Istisna Sukuk: Construction Istisna Sukuk, Manufacturing Istisna Sukuk
4) By Ijarah Sukuk: Operating Ijarah Sukuk, Finance Ijarah Sukuk
5) By Musharakah Sukuk: Equity-Based Musharakah Sukuk, Project-Based Musharakah Sukuk
6) By Mudarabah Sukuk: Investment Mudarabah Sukuk, Short-Term Mudarabah Sukuk
7) By Hybrid Sukuk: Mixed Structure Sukuk, Multi-Tiered Sukuk
8) By Other Sukuk Types: Green Sukuk, Social Sukuk, Sukuk Al-Waqf

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Who Are the Key Players Shaping the Sukuk Market's Competitive Landscape?
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

What Geographic Markets Are Powering Growth in the Sukuk Market?
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

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