UK seeks bigger share of booming Islamic finance market
London is positioning itself to attract growing pool of Shariah-compliant capital as Muslim wealth and demand for Islamic investments surge worldwide
LONDON (MNTV) — The U.K. is seeking to strengthen its position as the leading Western hub for Islamic finance as Muslim wealth and demand for Shariah-compliant investments grow rapidly, with a new industry report warning that London risks losing ground to rival financial centres unless it moves faster.
Global Islamic finance assets are projected to approach $10 trillion by the end of this decade, according to the London Stock Exchange Group.
The sector has grown at an estimated 10% to 12% annually in recent years, significantly faster than the wider financial industry.
The potential pool of capital is even larger.
Muslims globally held an estimated $27.8 trillion in wealth at the end of 2025, according to the Cambridge Islamic Wealth Management Report cited by TheCityUK.
Around $24 trillion of that wealth had not yet been deployed through Shariah-compliant channels.
TheCityUK, the industry body representing Britain’s financial and related professional services sector, says the figures represent a major opportunity for the U.K. to attract investment into property, infrastructure, renewable energy, healthcare and technology.
“Islamic finance is a strategic growth opportunity for the U.K.,” the organisation said in its July 2026 report, describing the sector as a link between Britain’s capital markets and rapidly expanding pools of institutional capital across the Gulf, Asia and Africa.
The U.K. already has a substantial foothold.
Fifty-seven Islamic investment funds were launched in Britain in 2024, while Islamic assets under management in the UK exceeded $12.5 billion by June 2025, rising 22.1% in a year.
Globally, Islamic funds expanded by 37% during 2025.
London has also attracted major Shariah-compliant investment into some of Britain’s most prominent property developments.
Qatari and other Gulf investors have used Islamic financing structures in projects including Chelsea Barracks, The Shard and East Village, while Malaysian and UAE investors have participated in major U.K. real-estate transactions.
The U.K.’s Islamic finance market has also moved into more sophisticated forms of capital raising.
In 2014, the British government issued a £200 million sovereign Sukuk, followed by a £500 million issuance in 2021.
Sukuk are Shariah-compliant investment certificates that provide investors with returns linked to ownership of, or investment in, underlying assets rather than conventional interest.
Both attracted strong international demand. In 2018, Al Rayan Bank issued a £250 million Sukuk, which was oversubscribed to 155% of the order book.
The global Sukuk market itself reached a record $291 billion in new issuance in 2025, a 14.5% increase from the previous year, taking outstanding Sukuk above $1 trillion.
Growing competition in Islamic finance
But Britain faces growing competition.
Countries such as the UAE, Saudi Arabia, Malaysia and Türkiye are increasingly incorporating Islamic finance into national economic strategies.
The UAE, for example, has set a target of $700 billion in Islamic banking assets by 2031, alongside more than $180 billion in Sukuk issuance.
Türkiye has also demonstrated how sustained sovereign Sukuk issuance can stimulate private-sector borrowing.
Turkish Petroleum’s 2026 Sukuk reached 5.5 times oversubscription, attracting 165 investors across Europe, Asia and the Middle East. A subsequent $500 million tap brought the total issuance to $1.5 billion.
At home, the opportunity is also significant. England and Wales had approximately 3.9 million Muslims, or 6.5% of the population, in the 2021 Census.
Yet TheCityUK says British Muslims continue to face limited access to suitable Shariah-compliant savings, pension and investment products.
The report argues that expanding such products could simultaneously improve financial inclusion for Britain’s Muslim population and bring more capital into the wider economy.
It recommends that the government develop a dedicated Islamic finance investment portal, maintain regular sovereign Sukuk issuance, expand Shariah-compliant insurance and position London at the intersection of Islamic finance and digital assets.
The stakes are increasingly international.
For Britain, Islamic finance is no longer simply a niche service for Muslim consumers. It is becoming a competition for some of the world’s fastest-growing pools of capital — and London is seeking to ensure that much of that money continues to pass through Britain.
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