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Wednesday, June 19, 2024

Are Investors Interested in Investing in Resorts and Real Estate in the Maldives?

The short answer is,Yes! – But it’s not as simple as that. The Maldives is the highest rate-yielding market in Asia Pacific (Horwath). It has also seen a strong increase in demand over the last decade as tourism arrivals have grown at an average of about 8% per year since 2008. The top source feeder markets for the Maldives also bode well with a favorable mix of geographies to mitigate geo-specific risks – (China, Germany, UK, Italy, India, Russia are the top 6).

There have however, been concerns of oversupply as a rush of new properties enter the market with 17 new resorts opening in 2019 alone. The Ministry of Tourism reports 787 registered accommodation facilities, including resorts, marinas, guesthouses and safari boats. This number will only continue to rise in the coming years.

Developing a resort in the Maldives also brings a host of other challenges. The “one island, one resort” concept makes for wonderful and exclusive getaways, but it also means every island must be a self-contained mini-city with power generators, desalination plants, shipping docks, security, massive fuel storage facilities, and housing for hundreds of full time staff. Logistics is also a difficulty. The Maldives is a beautiful place, but with a relatively small land area, the country does not produce many of the goods needed to keep a resort operational. Virtually everything must come by boat from other countries. This means supply ships and logistics must be masterfully controlled and managed.

Although there are more than a few challenges to contend with, the Maldives has been a popular place for investment. In the last 10 years, at least 22 resorts have been acquired by international organizations. Yields have ranged from 5% to 11% with a price per key (usually) from USD500,000 to 1,000,000. Most of the properties are 50 to 150 rooms. So if you have an extra USD25 to 150 million, the Maldives could be the place for you.

Article By : Dr James Mabey , Chief International Business Officer and Managing Director of Asia and Middle East at Standard International

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