United Arab Emirates developers are set to invest more than $3 billion in luxury real estate projects in the Maldives by 2030. This significant investment is expected to transform the island nation from a solely tourism-focused destination into a lucrative second-home market for the ultra-wealthy, with potential returns of up to 20 percent, according to industry experts.

Mohamed Ali Janah, Chairman of Hotels and Resorts Investment Maldives Pvt Ltd (HARIM), disclosed in an exclusive interview that the UAE will soon hold the largest portfolio of properties in the Maldives. He emphasized the rapid growth of this investment corridor, fueled by new ownership laws and infrastructure upgrades in the Indian Ocean archipelago, creating unique opportunities for developers experienced in luxury real estate.

Traditionally, the Maldives has been known for its honeymoon resorts, where tourists would pay thousands per night. However, recent legislative reforms have allowed for sectional ownership, enabling developers to sell individual villas and units to private buyers instead of entire islands. Janah noted that the Maldives is transitioning from luxury resorts to luxury real estate, highlighting that the sale of villas is now gaining traction as a viable investment option.

UAE-based developers are leading this real estate revolution, viewing the Maldives as a natural extension of their luxury property portfolios. Samana Developers recently announced a joint venture with fashion house Elie Saab to create a luxury development scheduled for completion by 2029. Prices for overnight stays at this new property are expected to range from $1,000 to $8,000, with owners benefiting from all-inclusive service packages.

Imran Farooq, CEO of Samana Developers, expressed confidence in the Maldives as an ideal location for luxury investments, stating, “Dubai is doing extremely well for us, and we believe that the Maldives is our natural upgrade to the ultra-rich segment.” Similarly, Elie Saab Jr. sees the Maldives as a logical expansion for their brand, citing its appeal as a spectacular destination.

FAM Holding PSC Group is also making significant strides by developing the Al Mahra Maldives Resort, which will cover 100,000 square meters and feature 150 villas, including 100 overwater villas. Construction is expected to commence in mid-2023 and be completed by mid-2025.

Beyond ultra-luxury developments, there are discussions about creating exclusive membership-based destinations on private islands, although these plans remain unverified. Ainsley Duncombe, Founder of Off Market Listing Dubai, mentioned that entry-level prices for island acquisitions start around $5 million, though additional infrastructure costs can increase this figure significantly.

The acquisition process for islands in the Maldives is regulated by the Ministry of Tourism, which oversees lease agreements. Janah explained that there is no freehold ownership in the Maldives; instead, leases are granted for an initial period of 50 years, renewable for an additional 49 years.

The timing of this investment surge can be attributed to various factors, including the resilience demonstrated during the COVID-19 pandemic when the Maldives and Dubai remained open to travelers. Janah remarked that this situation fostered investor confidence in the Maldives’ ability to manage crises effectively.

Farooq pointed out the impact of social media, as celebrities sharing their experiences in the Maldives during the pandemic sparked a surge in tourism, which has reportedly increased by 400 percent over the past four years. The expansion of Velana International Airport, backed by an $80 million investment from the Abu Dhabi Fund for Development, is also expected to boost tourist capacity from 2.4 million to 4 million annually when completed later this year.

Despite concerns about climate change and rising sea levels, developers are optimistic about the long-term viability of the Maldives. Duncombe noted that advanced Dutch engineering solutions are employed in reclamation work, ensuring the islands’ stability against environmental challenges.

The commercial relationship between the UAE and the Maldives extends beyond real estate, with the UAE being the largest source market for exports to the Maldives by volume. The Maldives established its embassy in the UAE in 2019, further solidifying the political and economic ties between the two nations.

Janah emphasized the ease of conducting business between the two countries, highlighting that the close proximity of travel—less than four hours by air—makes the Maldives an attractive destination for UAE investors. He described the relationship as mutually beneficial, noting that it facilitates significant investment opportunities.

Looking ahead, industry leaders anticipate rapid growth in the UAE-Maldives investment corridor, with ongoing negotiations hinting at future developments. As the tourism sector remains a cornerstone of the Maldivian economy, contributing approximately 28 percent to GDP, the shift toward real estate ownership signifies an evolution driven by the influx of UAE developers. Janah concluded that the returns on investments in the Maldives are highly promising, with expected returns of 15 to 20 percent.