22-07-2025
UAE Emerges as Global Islamic Investment Epicentre
Islamic-aligned transactions in the UAE soared to US $1.53 billion between 2023 and 2024, securing its position as the second-most active market after Indonesia in the global Sharia-compliant investment landscape. These figures, shaped by 50 deals covering mergers and acquisitions, private equity, and venture capital, are drawn from the 11th State of the Global Islamic Economy report by DinarStandard.
Indonesia led this period with 40 deals amounting to US $1.60 billion, while the UAE outpaced Saudi Arabia—which recorded 34 transactions worth US $1.08 billion—to capture a significant share of the expanding global halal economy.
The UAE's haul forms part of a broader global sector valued at US $7.3 trillion in 2023, including approximately US $2.4 trillion in Muslim consumer spending and US $4.9 trillion in Islamic financial assets. Capital deployment into Islamic-economy-relevant businesses reached US $5.8 billion across 225 deals in the same period.
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DinarStandard's Global Islamic Economy Indicator ranks the UAE fourth worldwide, with strong trade linkages, export capacity, and innovation cited as key enablers. CEO Rafi-uddin Shikoh attributed the nation's rise to its 'deep trade networks, ambitious digital and AI agendas and fast-scaling halal manufacturing capacity,' positioning it as 'one of the most influential hubs in the global Islamic economy.'
Investment activity was concentrated in mergers and acquisitions, private equity, and venture capital deals. Analysts suggest that growth reflects the UAE's efforts to diversify its economy, extend its fintech ecosystem, and scale halal-certified industries to meet global demand.
Across Islamic finance, global assets grew by 9.2% to US $4.93 trillion in 2023/2024, and are projected to reach US $7.53 trillion by 2027/2028 with an annual growth rate of 8.9%. The UAE is expected to be a major driver of this expansion, supported by innovative sukuk issuances, green finance, and fintech developments.
The issuer landscape is evolving: green and sustainable sukuk, blockchain-enabled digital sukuk, and conventional sukuk are all attracting investor interest. These encompass renewable infrastructure funding and socially responsible ventures. The UAE, aligning with regional sustainability goals, is primed to attract a growing share of such capital.
Technological adoption is accelerating. Dubai and Abu Dhabi are integrating blockchain in capital markets, pushing forward Islamic digital banking and regulatory reforms. Across the Gulf, fintech licensing is expanding alongside digital investment platforms.
Even as global sukuk issuance dips—falling from US $119 billion in mid-2024 to US $101.3 billion in the first half of 2025—GCC nations have demonstrated resilience, particularly in foreign-currency sukuk. The UAE's short-term treasury sukuk have garnered strong interest, maintaining liquidity and supporting sovereign financial strategies.
Challenges persist. Governance standards and risk management frameworks need strengthening, especially as Islamic finance instruments diversify. Yet, multilateral institutions such as the Islamic Development Bank, which has backed projects including a US $1.15 billion water initiative in Kazakhstan and a €500 million global sustainable sukuk programme, are bolstering ecosystem resilience.
Government initiatives in the UAE have also elevated its Islamic financial stature. The cabinet announced plans to more than double Islamic banking assets to AED 2.56 trillion, up from AED 986 billion, signalling strong policy intent to reinforce ethical finance growth.
The UAE's halal manufacturing, digital infrastructure and robust regulatory environment are helping attract equity and venture capital, particularly in emerging sectors such as halal food, pharmaceuticals, modest fashion, tourism and fintech. These are among the seven priority segments identified in the SGIE report.
Regional competition is intensifying. Saudi Arabia's Vision 2030 reforms and Indonesia's regulatory enhancements have fuelled respective surges in Islamic investment. The UAE is responding by pursuing niche leadership in digital halal finance and global standards to appeal to international stakeholders.
Private equity and venture capital are accelerating the sector's globalisation. Investments into halal-aligned startups in coalition with fintech and sustainability platforms are attracting interest from Gulf, Asia-Pacific, and European investors seeking ethical, growth-oriented assets.
