Oman: Sultanate’s Shariah market outpaces GCC peers

• Oman's Shariah market hits 20% milestone in national banking assets
• Islamic banking growth outpaces conventional sector by over 11%
• Total Islamic finance industry projected to exceed US$40 billion

Less than a decade and a half – that’s all it took for Oman’s Shariah sector to transition from a late-blooming experimental market into a resilient pillar of the nation’s economy.

Following the May 2011 launch of its preliminary Islamic bank licensing guidelines by the Central Bank of Oman, the Sultanate had shifted from being a regional outlier to a dynamic market outpacing the growth of some of its conventional counterparts in the GCC.

On the fund management side, Oman’s Shariah industry remains one of the smallest in the Middle East, with assets heavily concentrated in the hands of a few. As of the third quarter of 2025, the IFN Investor Funds Database tracked assets worth US$575.05 million, spread across just eight funds focused on four asset classes.

While those figures provide a snapshot of Oman’s specialized investment pool, the nation's broader Shariah financial industry is worth around US$36 billion, with US$24 billion of that, or 67%, made up of banking assets.

Fitch Ratings notes that Oman's Islamic banking assets grew by 16.8% year-on-year by July 2025, a figure that outpaced the 5.7% growth seen in the country’s conventional banking sector. While the Sultanate remains the smallest Islamic finance market in the region, its expansion rate is significantly ahead of the UAE and Bahrain, where Islamic banking sectors saw more modest growth of approximately 4% and 7.5% respectively in early 2025.

In line with that, Oman’s Shariah compliant banking sector reached a critical milestone, with its market share hitting approximately 20% of total national banking system assets by mid-2025. This achievement reflects a steady climb from the 18.1% share recorded during the same period in 2024.

Islamic asset spread

The IFN Investor Funds Database shows Oman’s asset management landscape currently dominated by specialized real estate holdings, where just two funds hold a cumulative US$374.53 million – or 65% of marketwide AuM.

Money market instruments follow in the second position, commanding US$139.37 million in AuM through a single, high-volume fund.

Equity assets represent the third tier of the market, managing US$51.66 million in AuM across three distinct funds.

Mixed assets round out the list, with US$9.49 million in AuM spread between two funds.

Chart 1: Oman’s Islamic assets by asset class, fund count and AuM

The largest Omani Shariah funds

The Omani fund landscape is defined by a select group of institutional leaders, with real estate and liquidity instruments commanding the lion's share of managed assets.

The Pearl REIF, a real estate investment fund managed by Sohar International Bank, is the market heavyweight with US$332.99 million in AuM.

Ahli Islamic Bank’s liquidity play, the Ahli Islamic Money Market Fund, is ranked second with US$139.37 million in AuM.

The third largest fund, Aman Real Estate Investment, is also a property play managed by Thara Global Business, with AuM at US$41.56 million.

Meethaq Equity, a flagship fund of Meethaq Islamic Banking, leads the pure equity segment, with US$23.33 million in AuM.

Two other equity funds – the US$15.53 million Al Kawthar managed by Tanmia and the $12.81 million Vision Al Khair GCC Fund run by Vision Capital – hold the fifth and sixth rankings, respectively.

Mixed-asset fund Gheras Endowment Investment, managed by Ubhar Capital, rounds out the rankings with US$9.49 million in AuM.

Table: Oman’s largest Islamic funds

Outlook

Oman appears positioned to further solidify its status as a regional leader in Shariah compliant growth as the market matures beyond its initial explosive phase.

This momentum in Oman’s Islamic banking growth is projected to continue as analysts from Fitch Ratings expect the industry to surpass the US$40 billion mark by 2026, driven by a widening digital banking footprint and ongoing regulatory refinements. This trajectory remains intrinsically linked to the Oman Vision 2040, which continues to leverage Islamic finance as a strategic tool for national economic diversification.

As local institutions increasingly align with global AAOIFI standards, the Sultanate is expected to narrow the asset gap with its GCC peers while maintaining its superior growth momentum.