Democratising sukuk: How fractional access is reshaping Islamic Finance

Khaleej Times

4 days ago

For years, Islamic finance has promised fairness, accessibility, and ethics. Yet, many of its key investment tools, like those in conventional banking, have been reserved for the few. Sukuk, Islamic fixed-income instruments, are a prime example. While they've become central to Islamic capital markets, they've remained largely out of reach for retail investors.
That's not due to a lack of interest or supply. The global sukuk market size reached $1.21 trillion in 2024 and is forecast to reach $3.99 trillion by 2033, with the ESG sukuk market surpassing $50 billion in outstanding value by the end of 2024, according to a report by LSEG.
The challenge, however, has always been access. Minimum investment thresholds in the hundreds of thousands have made sukuk the territory of institutions and high-net-worth individuals. That is changing.
Fractional sukuk, offering smaller, more affordable portions of these instruments, are slowly opening the doors to a wider audience. It's a fairly simple idea: instead of requiring at least $200,000 to participate, investors can now get started with just a fraction of that. There is a growing trend to democratise access to sukuk investments, catering to retail investors who can invest as low as $1,000 in Sharia-compliant fixed-income opportunities.
This development challenges the long-standing assumption that capital markets are, by nature, exclusive. But if sukuk are designed to reflect shared risk, asset ownership, and ethical investing, why should they have limited access? That question has prompted a complete rethink of the model.
It also responds to a shift in investor behaviour. Across the globe, younger generations are becoming more financially aware. New research from the World Economic Forum finds 30 per cent of Gen Z began investing in university or early adulthood, compared to 15 per cent of millennials, 9 per cent of gen x and 6 per cent of baby boomers. In today's unpredictable global economy that frequently disrupts traditional markets, investors are searching for safer ground. Sukuk, as fixed-income instruments, offer the kind of reliability that's increasingly hard to find.
They're also digital first, with little patience for the paperwork-heavy, opaque processes that have traditionally accompanied sukuk investments. This is where the combination of fractional ownership and digital access really matters.
ADIB, for instance, has taken a digital-first approach by offering a platform that supports fractional ownership through a streamlined digital interface allowing users to browse, subscribe to, and monitor sukuk investments, making access easier, faster, and more aligned with digital-native investor expectations.
According to Fitch Ratings, GCC sukuk issuance grew by 43 per cent YoY in 2024 to $87.5 billion, outpacing bonds (+1.1 per cent). Islamic banks are a large part of the GCC banking system and are key sukuk investors and issuers. The UAE remains a key global player in the sukuk market, accounting for 6.5 per cent of total global outstanding sukuk as of Q1 2025, ranking fourth worldwide after Malaysia, Saudi Arabia, and Indonesia.
'Fractional sukuk reflect the future of inclusive finance in the region. By combining accessibility with Sharia-compliant innovation, we're enabling a new generation of investors to build wealth in a way that aligns with their values. This isn't just about offering smaller ticket sizes, it's about reimagining the way finance serves people,' Amit Malhotra, Global Head of Retail Banking at ADIB, told Khaleej Times.
Of course, lower entry barriers come with responsibilities. Investors must be well-informed. Transparency around risk, returns, and terms is essential. Regulators and financial institutions will need to ensure that accessibility doesn't come at the expense of oversight. Still, the bigger picture is encouraging. By bringing sukuk into the portfolios of everyday people, the Islamic finance industry has a chance to reconnect with its founding promise: that finance should serve the community, not just the elite.
There is still work to be done, expert say. Public understanding of the product remains limited across many markets. But the direction is clear. 'Fractionalisation may seem like a technical adjustment, but it signals a larger shift in how financial products are designed, distributed, and perceived,' an analyst said.
At a time when investors are reevaluating what responsible investing means, Islamic finance has a timely opportunity, not by becoming more complex, but by becoming more inclusive, more accessible, and more aligned with its core values.
Making sukuk more accessible marks a meaningful step toward a more inclusive financial system, and it might just define the next chapter of Islamic investing.