Sukuk is a prominent long-term finance instrument that is compliant with the Islamic law (Shariah) and suitable for all types of development projects. Sukuk is the alternative to conventional bonds. Since the global financial crisis in 2008, demand for Sukuk has witnessed a remarkable uptake worldwide. The total value of Sukuk globally during the period 1996 to 2012 was approximately US $426 billion, of which US $139 billion was registered in 2012 alone.
The latest available forecasts indicate a growth in Sukuk issuance by 30 per cent in 2014, 20 per cent in 2015, and over 15 per cent during the years 2016-2018. Despite this significant increase, the forecasts indicate continued growth in global demand for Sukuk at rates significantly exceeding the volume of their issues, which indicates the global need to supply more Sukuk over the next five years. Sukuks are expected to amount to US $230 billion in 2014 and about US $187 billion in 2018.
In light of the enormous opportunities signaled by these projections for growth in the global Sukuk market, the Dubai Global Sukuk Centre Initiative was launched late February 2013 to realise this goal within ‘Dubai: Capital of Islamic Economy’ strategy. The initiative aims at transforming Dubai into a leading global hub for the issuance, listing, and trading of Sukuk.
The launch of the initiative was based on Dubai’s extensive experience in this field, given its high performing financial market. The Dubai Global Sukuk Centre offers an integrated and leading platform, in addition to housing the world’s leading financial institutions that operate regionally and globally from Dubai.
The response of local businesses to the launch of this initiative has been remarkable. A number of national institutions and companies, such as Dubai Electricity and Water Authority (DEWA), Emirates Airlines, Majid Al Futtaim Holding, and Sharjah Islamic Bank have listed Shariah- compliant instruments in Dubai to support the Dubai Global Sukuk Centre initiative and contribute to the development of the Islamic Economy sector.
Accordingly, the total value of the Sukuk listed on Dubai markets, the Dubai Financial Market and NasdaqDubai since the launch of the initiative at the end of October 2013 was approximately US $5.4 billion, pushing the nominal value to US $12.6 billion. The Dubai Global Sukuk Centre currently ranks third in the world‘s Sukuk listing centres.