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Arabian Business
13-03-2025
- Business
- Arabian Business
Paradise for sale? Maldives: How to buy a private island for $5 million
Private islands in the Maldives are selling for as little as $5 million, industry experts told Arabian Business. The Indian Ocean nation, traditionally known for luxury tourism, has opened pathways for foreign investment in island property, but the Maldivian Constitution explicitly prohibits foreigners from freehold ownership, creating a highly structured acquisition process centred around the Ministry of Tourism. Government application process All island acquisitions begin with formal applications to the Ministry of Tourism, which functions as the central authority for property leases. Applications require detailed development proposals, environmental impact assessments, and proof of financial capacity. 'The Ministry of Tourism is the one-stop shop for island leases,' explained Mohamed Ali Janah, Chairman of Hotels & Resort Construction and a prominent Maldivian investor. 'When you approach the government, they have certain regulations with bands for acquisition costs in different parts of the country.' The Maldives is divided into 20 administrative atolls, each with its own pricing band structure. Acquisition fees are calculated per hectare, with premium location rates in North and South Malé Atolls reaching several times the cost of more remote regions. The government releases islands through multiple channels: formal public tenders, direct applications, and investment-linked programmes. 'The government periodically announces islands that are available for lease. They also have cross-subsidy programmes, so you invest in something, and the government compensates you with an island,' Janah said. Leasehold-only structure Unlike markets offering freehold ownership, foreign investors in the Maldives must operate within a leasehold framework similar to Singapore's property model. 'Maldives doesn't have freehold. All these [projects] are leasehold,' Janah told Arabian Business. '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.' These limitations haven't deterred UAE-based investors, who typically structure their investments through Maldivian-registered companies. Legal specialists recommend establishing locally incorporated special purpose vehicles (SPVs) to hold the leasehold interests, providing additional regulatory compliance and potential tax advantages. Financing options remain limited for island acquisitions, with most transactions conducted using cash equity. Some regional banks offer lending for established investors, but typically at conservative loan-to-value ratios of 40-50 per cent rather than the 70-80 per cent common in mature markets. The $5 million entry barrier While island ownership is traditionally associated with billionaires, the Maldives market offers lower entry points than many assume. 'In terms of entry-level, we could get you an island for like $5 million,' said Ainsley Duncombe, Founder of Off Market Listing Dubai, who markets exclusive islands to wealthy clients. This represents merely the acquisition cost for smaller, undeveloped islands in less accessible locations. Industry sources indicate that islands in premium locations typically command $15-20 million before any development begins. The approval process typically takes 12-18 months from initial application to final lease agreement, requiring patience from investors accustomed to faster transaction timelines in other markets. Environmental regulations All development proposals must comply with strict environmental regulations, including mandatory environmental impact assessments administered by the Maldives Environmental Protection Agency. These assessments evaluate potential effects on coral reefs, marine life, and island ecosystems. Projects that fail to meet environmental standards face rejection regardless of investment scale. Recent regulatory changes require all new developments to include sustainable energy components, waste management solutions, and climate adaptation measures. Development economics The island acquisition cost typically represents just 15-25 per cent of the total investment required, with development expenses forming the bulk of the financial commitment. Marine engineering work presents the first major expense, with costs ranging from $2-5 million depending on the island's natural condition and protection requirements. 'The first thing before we can move a break, we need to make the wave current become friendly,' explained Imran Farooq, CEO of Samana Developers. 'That's a 120-day exercise, costs a big bill, but once that is done, the maintenance will be after 10-15 years.' Development budgets for luxury resorts typically range from $1-2 million per key (industry terminology for a lettable unit). A boutique 50-villa island resort might therefore require $50-100 million in construction costs beyond the island acquisition and marine engineering work. Construction logistics compound these expenses, as all materials must be transported to the island by boat or barge, adding 20-30 per cent to building costs compared to mainland construction. Climate engineering requirements Rising sea levels present a long-term consideration, with specific elevation requirements now built into the approval process. '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. This elevation standard has become industry practice, with Dutch engineering firms — the same ones involved in Dubai's Palm Jumeirah — often handling the complex marine works. Approval applications must include detailed plans for coastal protection and erosion management. 'The authorities are extremely strong. They are the people who have supported all the expansions and the marine engineering,' said Janah. ROI expectations Despite the substantial investment required, developers cite exceptional returns from operating luxury resorts or selling high-end properties. 'The ROI is one of the best in the world. So you're looking at 15 to 20 per cent return on your investments,' says Janah. Industry analysts note these projections rely on aggressive occupancy and rate assumptions, though the Maldives has historically outperformed global luxury hospitality markets. Average daily rates at top resorts frequently exceed $1,000, with ultra-luxury properties commanding $3,000-8,000 per night. For development yields to reach projected levels, resorts typically need to achieve occupancy rates above 65 per cent at these premium price points. Many properties partner with international luxury hotel operators to access global distribution networks and management expertise. Alternative investment structures The introduction of sectional ownership laws has created more accessible entry points for investors unwilling to commit to an entire island. '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.' These individual villa units, typically within established resorts, start at approximately $2-3 million for standard water villas, rising to $10-15 million for signature residences in premium locations. Branded residence projects from companies like Waldorf Astoria, Aman and Soneva offer these ownership options with rental arrangements when owners aren't in residence. Management fees of 10-15 per cent and participation in rental programmes are standard features of these arrangements. Gulf investors bullish on Maldives island market Limited supply and increasing global investor interest have created a competitive market for prime islands. A source involved in recent transactions reported multiple offers for desirable properties, often from UAE, Saudi and Qatar-based investors. 'The appetite to invest in Maldives is very strong,' said Janah. 'There is political stability.' For serious buyers, establishing relationships with well-connected local partners often proves essential to accessing off-market opportunities. Several UAE-based developers have established joint ventures with Maldivian partners to navigate the local business environment. Despite the substantial investment required and complex regulatory landscape, the unique combination of natural beauty, exclusivity and strong returns continues to attract new investors to the Maldives island market — particularly those already familiar with the development economics of luxury destinations like Dubai.
Arabian Business
11-03-2025
- Business
- Arabian Business
EXCLUSIVE: UAE developers pour billions into Maldives as luxury island market heats up
United Arab Emirates developers are investing more than $3 billion in Maldivian luxury real estate projects through 2030, according to investors and industry insiders familiar with the market. This $3 billion pipeline is set to transform the island nation from a tourism-only destination into a second-home market for the ultra-wealthy with returns of up to 20 per cent, experts told Arabian Business. 'I can tell you over $3 billion in the pipeline,' said Mohamed Ali Janah, Chairman of Hotels & Resort Construction 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 growing investment corridor between the UAE and Maldives comes as the Indian Ocean archipelago introduces new ownership laws and infrastructure upgrades, creating unprecedented opportunities for property developers already experienced in building high-end destinations. From honeymoon resorts to residences For decades, the Maldives has been synonymous with honeymooners and luxury travellers seeking pristine beaches and turquoise waters. The typical visitor would spend thousands per night at a resort, but ownership was restricted to major hospitality companies willing to lease and develop entire islands. That model is rapidly changing following legislative reforms implemented two years ago that introduced 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 At the forefront of this real estate revolution are UAE-based developers who see the Maldives as a natural extension of their luxury property portfolios. Samana Developers recently announced a joint venture with fashion house Elie Saab for a luxury development targeting completion by 2029. Prices for overnight stays in the property are expected to range from $1,000 to $8,000, while owners would enjoy all-inclusive packages built into their service charges. View this post on Instagram A post shared by SAMANA Developers (@ '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, spanning 100,000 square metres with 150 villas, including 100 overwater villas, 40 beach villas, and 10 VIP villas. Construction was reportedly set to start in mid-2023, with completion expected by mid-2025. Several other UAE-backed projects are slated 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 segment dominates headlines, the investment spectrum is broader than many realise. A source familiar with the market said there are discussions about creating exclusive membership-based destinations on private islands. Arabian Business has learned of (but has not been able to verify) plans for a private members' club targeting the top 1 per cent of global entrepreneurs, offering them a secluded networking environment away from the public eye. 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? The timing of this investment surge can be traced to several converging factors. The COVID-19 pandemic proved pivotal for the Maldives property market. When most of the world shut down, the Maldives and Dubai remained accessible to travellers, creating significant goodwill and business 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.' A key development facilitating this growth is the expansion of Velana International Airport, supported by the Abu Dhabi Fund for Development with a reported $80 million investment. The expansion is expected to increase tourist capacity from 2.4 million to 4 million annually when completed, likely at some point 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 international concern about rising sea levels threatening the low-lying archipelago, developers remain confident in the Maldives' long-term viability, citing advanced Dutch engineering solutions similar to those used 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 prioritising sustainability, with a national target to become carbon neutral by 2030, according to Duncombe. Additional environmental protection measures 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. The relationship has deepened politically as well. The UAE established its embassy in the Maldives in 2019, while 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, contributing about 28 per cent of GDP, the pivot to real estate ownership represents a natural evolution rather than a departure. But with UAE developers in the driver's seat, the transformation is accelerating rapidly. '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.
