UAE government bonds are more than just a financial investment

Such bonds’ higher yields and stability attract interest as does the fact that user-friendly digital trading platforms make it easier than ever to invest. Antonie Robertson / The National

In a world of rapidly changing markets, perception is everything. Although the global economy is perhaps not as volatile as some people think – two weeks ago the International Monetary Fund raised its worldwide growth forecast to 3.2 per cent for this year – many individual investors see risk on the horizon and are a looking for a safe haven.

The record 2026 budget passed by the UAE Cabinet yesterday will help secure the country's reputation as such a dependable economy. However, despite the spending plan's ambitious nature, prudence was its watchword; Sheikh Mohammed bin Rashid, Prime Minister and Ruler of Dubai said the budget aimed at "balanced development" not only for the economy but for society too.

It is a society that is increasingly able to participate in all aspects of the UAE economy. On Friday, the Emirates launched an initiative to allow individuals to invest in Sharia-compliant government bonds. Whereas before only institutional investors were allowed to purchase such assets, citizens and residents can now buy government-backed treasury sukuk (T sukuk) with a relatively modest minimum investment price of Dh4,000 ($1,089.17). This news says a lot about this asset class and the direction the UAE is headed in.

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Although gold prices are often an eye-catching indicator of where people are storing their wealth, the less glamorous but equally significant world of government bonds is of vital importance.

Government bonds are on the rise. As some institutions move away from them, more individual investors are stepping in. According to the Organisation for Economic Co-operation and Development’s Global Debt Report 2025, central banks’ holdings of domestic government bonds in OECD states fell from 29 per cent to 19 per cent between 2021 and last year. At the same time, so-called retail investors – individuals and households – increased their holdings from 5 per cent to 11 per cent.

In emerging economies more and more people regard government bonds as a wise investment. In Brazil, retail holdings of government bonds increased by 150 per cent between 2020 and last year, reaching 2.1 per cent of gross domestic product. In Indonesia, the number of retail investors almost doubled over the same four-year period, buying 19 per cent of the domestic bonds and sukuks issued in 2024. In the GCC, Saudi Arabia last year introduced a comparable bond scheme for citizens called the SAH Retail Savings Sukuk.

The UAE’s position as the Arab world's second-largest economy is one that engenders confidence that buying its government’s debt is a sure-footed move

Such bonds’ higher yields and stability attract interest as does the fact that user-friendly digital trading platforms make it more accessible than ever to invest. As mentioned earlier, perception is important – the UAE’s position as the Arab world's second-largest economy is one that engenders confidence that buying its government’s debt is a sure-footed move.

This development is more than just a new financial product and will have an effect beyond the composition of people’s investment portfolios. Those who choose to invest in UAE government bonds will be buying in to country’s long-term vision. By making such sukuk available to the general public, the investor base for sovereign debt is expanded, financial inclusion is increased and a savings culture promoted. It is one more piece of the puzzle being put together to ensure future growth.