According to investors and industry insiders familiar with the business, developers in the United Arab Emirates will invest more than $3 billion in Maldivian luxury real estate projects by 2030.
Experts told Arabian Business that this $3 billion pipeline will transform the island nation from a tourism-only destination to a second-home market for the ultra-wealthy with returns of up to 20%.
“I can tell you over $3 billion in the pipeline,” said Mohamed Ali Janah, Chairman of Hotels and Resorts Investment Maldives Pvt Ltd (HARIM) and one of the Maldives’ biggest investors, in an exclusive interview. “UAE will be holding the largest portfolio in the next five years.”
This rapidly expanding investment corridor between the UAE and the Maldives occurs as the Indian Ocean archipelago implements new ownership laws and infrastructural enhancements, generating unprecedented potential for property developers with experience establishing high-end destinations.
From honeymoon resorts to residences
For decades, the Maldives has been associated with honeymooners and luxury travelers looking for pristine beaches and clear oceans. The average visitor might pay thousands of dollars a night at a resort, but ownership was limited to major hospitality companies willing to lease and develop entire islands.
That paradigm is gradually evolving as a result of legislative revisions passed two years ago that established sectional ownership, allowing developers to sell individual villas and units to private buyers rather than operating entire resorts.
“Maldives is now transitioning from luxury resorts to luxury real estate,” explained Janah. “For the past couple of years, you could have been hearing that villas are on sale in the Maldives. It took baby steps to introduce Maldives as a real estate destination for luxury villas.”
The shift has caught the attention of major international property brokerages, Janah said, adding that developers are “not only building luxury villas for sale, we are also building private islands for sale. This is the next big thing that is going to happen.”
Dubai developers lead the charge
UAE-based developers are leading the way in this real estate revolution, seeing the Maldives as a natural expansion of their luxury property portfolios.
Samana Developers recently announced a partnership venture with fashion label Elie Saab for a luxury complex set to be completed in 2029. Overnight vacations at the facility are estimated to cost between $1,000 and $8,000, while owners will receive all-inclusive packages as part of their service charges.
“Dubai is doing extremely well for us, and we believe that the Maldives is our natural upgrade to the ultra-rich segment,” said Imran Farooq, CEO of Samana Developers. “What better way than to offer a second holiday home, and that too, in Maldives? We are giving an opportunity to our investors to buy a piece of paradise.”
For Elie Saab Jr., who oversees the brand’s real estate ventures, the Maldives represents a logical expansion after successful projects across the Middle East. “Maldives is one of the most spectacular places in the world and the most sought after to any traveller that seeks to have a piece of paradise,” he said.
FAM Holding PSC Group is also developing the Al Mahra Maldives Resort, which will cover 100,000 square metres and have 150 villas, including 100 overwater villas, 40 beach villas, and 10 VIP villas. Construction was apparently scheduled to begin in mid-2023, with completion projected in mid-2025.
Several additional UAE-funded developments are set to open soon, including Centara Grand Lagoon Maldives in North Malé Atoll, Corinthia Maldives in North Malé Atoll, and Mandarin Oriental Bolidhuffaru Reef in South Malé Atoll.
The new island economy
While the ultra-luxury market makes headlines, the investment spectrum is much larger than most people realize.
According to a market insider, discussions are underway to create exclusive membership-based destinations on private islands. Arabian Business has learned of (but has not been able to confirm) plans for a private members’ club aimed at the top 1% of global entrepreneurs, allowing them a discreet networking atmosphere away from the public glare.
Entry prices for island acquisition can be surprisingly accessible. “In terms of entry-level, we could get you an island for like $5 million,” said Ainsley Duncombe, Founder of Off Market Listing Dubai, though he cautioned that infrastructure development costs would add substantially to that figure.
The process for acquiring islands follows a structured government process. “The Ministry of Tourism is the one-stop shop for island leases,” explained Janah. “Maldives doesn’t have freehold. All these [projects] are leasehold. You get the islands for a 50-year lease at the first instance, and then you can buy another 49 years, so you can go up to 99 years.”
The government sets acquisition costs based on location, island size, and regional band pricing. “When you approach the government, they have certain regulations with bands for acquisition costs in different parts of the country,” Janah explained. “This is divided into 20 atolls, administrative regions. You can apply to the government and they will tell you the acquisition cost and fees based on the area of the island.”
Why now?
Several converging causes contributed to this investment rush.
The COVID-19 outbreak proven critical for the Maldives’ property market. When the rest of the globe shut down, the Maldives and Dubai remained open to visitors, fostering considerable goodwill and commercial confidence.
“We managed our country during COVID very well. I think Dubai and Maldives were the only two places that were open,” said Janah. “This gave the confidence to investors that Maldives will bounce back, or Maldives would manage the country very well, no matter the crisis.”
Farooq pointed to the role of social media. “The pandemic is where people had time. They were at home, and all these celebrities started posting their pictures in the water villas, and that drew up the excitement. So that trend of celebrities going and posting in the Maldives caught like fire in 2020, and all of a sudden, you see the numbers in tourism have jumped 400 per cent in the last four years.”
The extension of Velana International Airport, which is being funded by the Abu Dhabi Fund for initiative with an estimated $80 million investment, is a crucial initiative that is allowing this growth. When completed, the extension is planned to raise tourist capacity from 2.4 million to 4 million per year, most likely later this year.
“The current President is working on getting this airport open in October this year,” Janah notes. “So he is doing a lot of work effort to get projects completed and operational within the year.”
The Maldives’ “open sky policy” has also contributed to the island nation’s accessibility. “As an airline, you don’t have a bureaucratic process,” explained Farooq. “You just decide and send them an email that from this time I will be having this capacity. Can you make logistical arrangements? Not approve, but make the logistic arrangement, and you just pay your landing fee.”
Climate concerns and engineering solutions
Despite widespread fear that rising sea levels will imperil the low-lying archipelago, developers remain optimistic about the Maldives’ long-term viability, citing advanced Dutch engineering solutions similar to those utilized in Dubai’s Palm Jumeirah.
“Pessimistic scenarios expect a sea level rise of around one metre by the year 2100, while reclamation work in the Maldives assumes 2 to 2.5 metre elevation over current sea levels,” explained Duncombe. “Reclamation work is typically done by Dutch companies, which have access to the most advanced technologies in the field globally.”
Farooq added that marine engineering work is a standard part of development costs. “The first thing is before we can move a break, we need to make the wave current become friendly. That’s a 120-day exercise, costs a big bill, but once that is done, the maintenance will be after 10-15 years.”
Janah expressed confidence in the country’s environmental management. “The authorities are extremely strong. They are the people who have supported all the expansions and the marine engineering. The Maldives, Amsterdam, these are the two countries way ahead of the curve when it comes to expanding your islands or stabilising the water current.”
The Maldives is also prioritizing sustainability, with a national goal of becoming carbon neutral by 2030, according to Duncombe. Additional environmental safeguards include decentralised waste management, modular housing, and floating infrastructure.
The growing UAE-Maldives corridor
The growing commercial relationship extends beyond real estate into broader economic ties, with the UAE becoming the “single largest source market for export to the Maldives by volume,” according to trade statistics.
Political ties have also grown stronger. The UAE opened its embassy in the Maldives in 2019, and the Maldives has had an ambassador to the UAE since 2012.
“The Maldives and UAE have been connected since a very long time,” said Janah, who began travelling to the UAE in the late 1990s. “I have seen the growth of the relationship over the years, and now it’s actually at its highest level.”
The close proximity — less than four hours by air — makes the Maldives particularly attractive to UAE investors and tourists alike. “As UAE gets busier, people are looking to places they can go to relax and chill out away from the hustle and bustle of the big city,” said Duncombe.
Janah describes the relationship as a “win-win for both countries,” adding that “it’s very easy to make deals, it’s very easy to access the funds from Dubai. It’s an extension of their business, and it is also a very attractive business for them.”
Looking ahead, industry leaders expect the UAE-Maldives investment corridor to accelerate dramatically. “I think the growth level that you will see between these two countries in the next two years would be unimaginable,” predicted Janah, hinting at deals currently under negotiation. “It will come from Abu Dhabi. It will come from Dubai, from Doha, everywhere.”
With tourism remaining the cornerstone of the Maldivian economy, accounting for approximately 28% of GDP, the shift to real estate ownership is a natural evolution rather than a departure. However, with UAE coders in control, the shift is speeding.
“I think as we see more and more ultra-wealthy and high net-worth individuals make the UAE their permanent residence, we’re also going to be seeing more people going to the Maldives and having that as a secondary or additional residence,” said Duncombe.
For those seeking to buy into the Maldivian dream, returns are reported to be exceptionally strong. “The ROI is one of the best in the world. So you’re looking at 15 to 20 per cent return on your investments,” said Janah.