Sukuk in the UAE Property Market 2025

The UAE's real estate sector has undergone a period of robust growth over the past years, with a notable increase in the use of Islamic finance instruments, particularly sukuk, to fund large-scale developments. This trend reflects the country's strategic focus on diversifying its economy and strengthening its position as a global financial hub. A series of landmark deals, including the recent issuance by Binghatti Holding, highlights the growing confidence of international investors in the UAE's property market.

Key Real Estate Sukuk Deals and Market Activity in 2025

Recent months have been marked by significant sukuk issuances from major developers, demonstrating a flight to quality and strong appetite for well-rated, long-tenor debt. Here is a summary of the most recent key deals:

• Binghatti Holding's US$500 Million Sukuk (August 2025): This benchmark sukuk has been a landmark deal for Dubai's real estate sector. The 5-year senior unsecured sukuk was priced with a profit rate of 8.125% and was significantly oversubscribed, attracting over US$2.5 billion in orders. The issuance, listed on the London Stock Exchange, will also be listed on Nasdaq Dubai, underscoring the strong international investor interest in Dubai's real estate. Proceeds are earmarked to finance the company's extensive development portfolio, including a new master-planned community.
• Arada's US$450 Million Sukuk (July 2025): Sharjah-based developer Arada successfully raised US$450 million with an oversubscribed sukuk. The deal, which had a final yield of 7.15%, was met with strong investor interest, peaking at over US$2 billion in orders, signaling the return of investor confidence in the region's real estate sector.
• Sobha Realty's US$500 Million Sukuk (May 2025): Sobha Realty successfully issued a 3-year sukuk that saw its order book oversubscribed three times, reaching US$1.54 billion. This issuance, with a final yield of 8.0%, reflects the sustained demand for debt from reputable developers.
• Aldar Investment Properties' US$500 Million Green Sukuk (March 2025): Aldar, a key player in the Abu Dhabi market, issued its third Green Sustainable Sukuk. This 10-year, US$500 million issuance was oversubscribed 7.2 times, attracting US$3.6 billion in orders. This deal highlights the growing importance of sustainability-linked sukuk in the UAE, with proceeds to be used for green buildings and energy-efficient projects.

UAE Sukuk Market in 2025

The UAE's Dirham-denominated Islamic Treasury Sukuk (T-Sukuk) auctions continue to demonstrate robust demand, reflecting strong confidence in the country's fiscal framework and its Islamic finance market. According to official reports from the Ministry of Finance, the June 2025 auction attracted total bids of AED 6.21 billion ($ 1.69B), resulting in a significant oversubscription of 5.6 times. The following month, the July 2025 auction also saw strong investor interest, with bids reaching AED 5.35 billion ($ 1.46B), achieving an oversubscription rate of nearly five times.

Based on the provided financial highlights for H1 2025, here's an analysis of the DFM's financial assets breakdown.

Source: DFM investor presentation H1 2025

The pie chart shows that the largest portion of DFM's financial assets is in Investment Deposits, accounting for a significant 64.0%. This suggests a strategic focus on stable, low-risk assets.

The second-largest holding is Investment in Equity Securities, which makes up 17.8% of the portfolio. Following that, Sukuk represents the third-largest holding at 12.1%. These sukuk are primarily held within the UAE, have maturities of 2-10 years, and provide an average fixed profit rate of 4% per year. This significant investment highlights a strong commitment to and confidence in Islamic finance.

The remaining assets consist of Cash & Cash Equivalents (5.7%) for liquidity and a minor holding in Managed Funds (0.4%).

Global Sukuk Market in H1 2025

The global sukuk market maintained its growth momentum in the first half of 2025, with Fitch-rated sukuk surpassing $210 billion, marking a 16% annual increase. The market continues to demonstrate resilience, with around 80% of Fitch-rated sukuk at investment grade and no defaults recorded as of end-H1 2025.

The Middle East remained the dominant hub, accounting for 69.9% of all Fitch-rated sukuk, followed by Asia at 21.6% and Europe at 7.3%. This regional concentration underscores the central role of the GCC and wider MENA region in driving Islamic finance globally, while Asia, particularly Malaysia and Indonesia, continues to serve as a significant contributor.

Fitch data shows that 39% of sukuk are rated in the ‘A’ category, while 25% are rated ‘BBB’ and 13% ‘BB’. The global sukuk market is dominated by U.S. dollar-denominated, bullet, and fixed-rate structures, with most issuances carrying medium-term maturities of three to ten years. While longer- and shorter-tenor sukuk remain limited, regional diversity is reflected in ringgit-denominated offerings from Asia. A key growth driver is the rise of ESG sukuk, now valued at $25 billion (12% of Fitch-rated sukuk), often dual-listed on major exchanges like the London Stock Exchange, Nasdaq Dubai, and Euronext, underscoring their international appeal and alignment with global sustainability goals.

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Shariah Compliance: At the Heart of Our Commitment

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Ready to invest with peace of mind? Join Tabadulat today and access a platform where every opportunity is rigorously Shariah-aligned, every transaction is powered by integrity, and your faith is never compromised.

FAQs

What is Sukuk and how does it work?

Sukuk are Shariah-compliant financial certificates similar to bonds, representing ownership in underlying assets. Investors earn returns from profit-sharing, rent, or asset performance, avoiding interest-based structures prohibited in Islamic finance.

Is Sukuk halal or haram?

Sukuk are halal if structured according to Shariah principles, backed by tangible assets, profit-sharing, or leases. If they mimic conventional interest-bearing debt, they may be considered non-compliant.

What is the difference between a bond and a Sukuk?

Bonds represent debt with fixed interest payments, while sukuk represent asset ownership, sharing profits or rents instead of interest. Sukuk must follow Islamic principles, making them Shariah-compliant alternatives to conventional bonds.

What are the three types of Sukuk?

Common sukuk types include: Ijara (lease-based), Mudarabah (profit-sharing), and Musharakah (partnership-based). Each structure aligns with Shariah principles, ensuring returns are derived from real economic activity, not interest.

What is Sukuk in UAE?

In the UAE, sukuk are widely used by corporates and government entities to raise capital. Dubai and Abu Dhabi serve as leading global hubs, with issuances often listed on Nasdaq Dubai and LSE.

How to invest 5000 AED in UAE?

With 5,000 AED, you can explore Shariah-compliant investment funds, sukuk, ETFs, or digital brokerage platforms like Tabadulat, Zoya and Sarwa. Always diversify across asset classes and consider regulated platforms for safe and compliant investing.

What is the UAE strategy for Islamic finance?

The UAE’s strategy aims to position Dubai as the global capital of Islamic economy. It promotes sukuk markets, Shariah-compliant banking, fintech innovation, and green sukuk, aligning with long-term economic diversification goals.

How can I buy bonds in the UAE?

Bonds and sukuk in the UAE can be purchased through local banks, licensed brokers, or trading platforms like Nasdaq Dubai and Tabadulat, Zoya and Sarwa. Investors must meet regulatory requirements and minimum investment thresholds.