New UAE Retail Sukuk Programme; A Milestone in Investor Access
The Ministry of Finance – UAE (MoF) is launching a retail version of the government-backed Islamic sovereign bonds (or “sukuk”) programme:
- Individual investors (not just institutions) will be allowed to buy the sovereign sukuk.
- It mentions a minimum investment of AED 4,000.
- It will be distributed through participating banks, with the first bank to be announced on 3 November 2025.
- The instrument will be denominated in UAE dirhams (AED), reducing currency risk for local investors.
- Investors will receive periodic profit payments and get the face value back at maturity.
- As with any fixed-income/investment instrument, early liquidation (selling before maturity) may depend on the secondary market conditions.
- It is a Shariah-compliant (“Islamic”) instrument, i.e., a sukuk structure.
One news source summarises:
“The United Arab Emirates has launched a new initiative allowing individual citizens and residents to invest in government-backed Islamic financial instruments for the first time … under the ‘Retail Sukuk’ program.”
Why this is significant
Democratising access – Until now, sovereign or government issuances of sukuk in the UAE were largely accessible to institutional investors (banks, insurance companies, large funds) rather than individual retail investors.
Dirham-denomination – By issuing in AED, the government reduces foreign-exchange risk for UAE-based investors (who earn/spend in AED).
Financial inclusion & Islamic finance appeal – For UAE residents who prefer Shariah-compliant investment products, this opens a new avenue of “safe” (sovereign-backed) Islamic fixed-income.
Yield-curve development & market deepening – From the government’s side, such programmes help build a domestic dirham-denominated yield curve and deepen the bond/sukuk market in the UAE.
- Secondary-market/liquidity matters – While the product may look safe, liquidity (ease of selling before maturity) and early exit conditions are important to check. The news itself warns that early liquidation may depend on secondary-market conditions.
Some things to check / caveat
As with any investment, especially one newly opened to retail, several details matter:
- Minimum investment – The article mentions “AED 4,000” minimum. Make sure when the bank(s) launch it that this is indeed the minimum and whether there are incremental steps (e.g., multiples of AED 4,000).
- Tenor / maturity – What is the maturity period (e.g., 2 years, 5 years, 10 years)? How frequently are profit payments made (e.g., semi-annual, annual)?
- Profit rate / yield – The actual yield (or “profit share” since this is sukuk) will be important: what rate is declared, how does it compare to deposit rates or corporate sukuk yields, etc.
- Credit / sovereignty risk – Whilst the issuer is the UAE federal government (which is highly creditworthy), no investment is absolutely risk-free: there could be structural, market or liquidity risks.
- Secondary market / liquidity – The earlier dispersions of such sukuk were targeted at institutional investors; retail availability means the secondary market may initially have limited depth, which might make early exits less favourable.
- Shariah compliance / structure – Because these are Islamic instruments, understand the contract structure (for example, Ijara, Murabaha, Wakalah) and what “profit payments” mean in this context.
- Bank distribution / fees / charges – The bank(s) participating may charge fees or have conditions for onboarding, KYC (Know Your Customer), suitability etc.
- Tax/treatment – While the UAE doesn’t have personal income tax for such investments for most residents, any other jurisdictional implications (if you are resident elsewhere) must be considered.
Implications for you (and clients)
Since you are based in Dubai, UAE, this is immediately relevant. A few practical implications for you (and for the clients of your firm) to keep in mind:
- For individuals (UAE citizens or residents) looking for Shariah-compliant, sovereign-backed fixed-income in their native currency, this could be a good addition to their portfolio.
- As legal advisers (or your firm’s clients) you may want to check all the documentation: issuance terms, risk disclosures, bank distribution terms, whether the instrument is tradable in a secondary market and subject to early-exit risk.
- For clients who ask about “safe/predictable income” alternatives for surplus cash (versus bank deposits or corporate sukuk), this can be part of the discussion—but with full disclosure of risks and exit conditions.
- Consider implications for estate/inheritance (for UAE residents) and for cross-border clients (e.g., expatriates) if they have additional tax/foreign-investment implications.
- The fact that the distributor bank will be announced 3 November 2025 means you may want to track which bank(s) participate, and whether all banks will eventually carry it or just selected ones.
Summary
In summary: the UAE government is for the first time opening up its sovereign Islamic bond programme to retail investors, with a low (for such instruments) minimum investment (AED 4,000) via participating banks, denominated in AED, offering periodic profit payments and return of principal at maturity. It marks a significant step in financial inclusion and the expansion of the sukuk market in the UAE.
Disclaimer:The opinions expressed in this blog are those of the respective authors. Our law firm does not endorse these opinions. While we make every effort to ensure the factual accuracy of the information provided in our blogs, inaccuracies may occur due to changes in the legislative landscape or human errors. It is important to note that our law firm does not assume any responsibility for actions taken based on the information presented in these blogs. We strongly recommend taking professional advise to ensure the best possible solution for your individual circumstances.
