The perils (and rewards) of buying property in the Maldives
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Until the first Gulf war forced him out, Patrick Brizio built flashy homes for the Jordanian royal family. A few years before, as a British naval officer during the Falklands war, he found himself fishing injured soldiers out of the South Atlantic.
His latest job may be less harrowing than that, but the logistics could be as taxing. Building a top-end property development on a Maldivian atoll in the Indian Ocean is no island stroll. From our motorboat he gestures to a sunken fuel tank a few hundred metres from the shore. Each week it pumps 10,000 litres of diesel ashore to drive the building machinery. The fuel is deposited by a tanker that would run aground if it entered the island’s lagoon. For cement and supplies, a barge journeys back and forth from tankers beyond the reef.
On land, 800 people are working furiously to complete Soneva Jani — the latest adventure in high-end private island living. The result will be 25 holiday villas 35 minutes by seaplane from Malé, the capital. All but one will stand on stilts over the lagoon. One-bedroom homes are available for $3.95m, including a retractable electric roof for horizontal stargazers and an infinity pool and waterslide from the upper floor into the sea.
It may seem like peculiar timing to be calling out the Maldives as the latest holiday-home hot spot for the world’s super-rich. The politics of the remote archipelago are precarious. In January, the government released Mohamed Nasheed, the country’s opposition leader and first democratically elected president, from jail to undergo medical treatment in the UK, where he promptly sought — and was granted — asylum.
In June, Ahmed Adeeb, the former vice-president, was jailed for 15 years, accused of a plot to assassinate his boss. He became the fourth senior politician to be imprisoned on terrorism charges since 2013. A defamation law introduced in August is widely seen as a move to muzzle government critics. The Commonwealth has long pestered the government over this erosion of democratic rights, threatening the Maldives with expulsion in September. The government saved it the bother, quitting the organisation the following month.
All this is beginning to bother the foreign holidaymakers on whom the Maldives economy relies. A brief state of emergency in November last year caused visitor numbers to fall. Visits from China — Chinese comprise almost one in three foreign tourists — dropped by a fifth that month. This year, the seasonal drop in numbers from the February peak to the June low was the steepest for years. At the highest end, revenues at Soneva Fushi — Soneva Jani’s neighbouring resort, which is owned by the same group — failed to grow last year for the first time in its two-decade history.
A day wandering around Malé offers little encouragement. After the BBC reported an impending coup at the end of August, fellow broadcaster Al Jazeera upped the ante, accusing senior ministers of laundering $1.5bn through the Maldives central bank. Those opposition MPs not locked up seem to have fled. After a day in the congested city, all I have to show is a furtive text exchange with a restive government MP, under strict condition of anonymity. “Very concerned by what’s happening in my country, but the climate is not one conducive to sharing of frank opinions,” it concludes.
There is also the question of rising sea levels. Average land elevation on the Maldives is 1.6 metres, making it the least elevated country on earth. In 2013, the Intergovernmental Panel on Climate Change predicted a rise in sea levels of almost a metre by the end of the century. A little over half that would make most of the country uninhabitable. Ex-president Nasheed convened underwater cabinet meetings and pledged to be carbon-neutral by 2020. His successors have been less proactive: last September the emissions target was watered down to a 10 per cent reduction by 2030. The future looks bleak.
Rising sea levels should be no obstacle to Paul van de Camp. The upbeat Dutchman, who honed his craft building a floating prison off Amsterdam, has just finalised delivery of the Ocean Flower floating resort to a lagoon in the North Malé atoll. About 20 minutes by boat from the airport in Malé, it will comprise 185 floating homes, bound together with a central platform featuring a restaurant, bar and pool area.
The last couple of years have been complicated, he admits. Yet his negotiations with the government have secured the 50-year leases that come with the floating homes, with an option to extend them by another 49, he says. (Buyers at Soneva Jani will get the same.) A two-bedroom property with a pool on Ocean Flower is on sale for $2m through Christie’s International Real Estate. In a separate project, van de Camp hopes soon to tow in the first of 10 man-made islands — which comes with a home with four bedrooms and two staff rooms — into another lagoon nearby. They should sell for $10m each.
If only the real thing will do, an 18-hectare private island called Kuramaadhoo, 45 minutes by seaplane from Malé, is on sale through Private Islands Online for $6m. However, budget several million more for a suitable island palace: Kuramaadhoo is as yet undeveloped.
What van de Camp and Soneva offer — and what their peers will too if and when they launch — are not typical second homes. First, the properties on sale are a minority of each development, with the rest working as high-end holiday rentals. This means homeowners benefit from the same services as guests. At Soneva Fushi — the existing Soneva resort, where holidaymakers pay between $1,000 and $44,750 a night — they have the run of the 56-hectare island. The children’s playground, pools and learning centre look like they have been designed by Walt Disney himself; one restaurant contains three separate refrigerated rooms devoted to, respectively, chocolate, desserts and cheese.
As these rates suggest, villa owners can expect a decent rental income. Even after the 1.5 per cent management fee, existing owners at Soneva Fushi generate about 4 per cent of the purchase price each year in rental income, says Sonu Shivdasani, Soneva’s founder and chief executive. Cost in what they would pay for the weeks they stay at their homes and that climbs to 8 per cent. The equivalent for a flat in Mayfair is 2.6 per cent, according to Savills, and that is without being able to drop in for a tropical island break in the school holidays.
Do the super-rich really care about trifles such as yield? Yes, says Yolande Barnes, head of research at Savills. “Increasingly, this group is looking at homes as a portfolio of assets,” she says. “As well as considering capital increases, this means thinking about yield.”
There is certainly a market for lavish holiday homes in Asia. The number of those with property wealth of $30m or more in the region more than doubled to 41,000 in the decade to 2015, says market researcher New World Wealth.
China’s super-rich could hold the key. Historically, this group has shunned the fripperies of beach holidays. Yet many moneymaking millennials have been educated or worked in the US or Europe and are returning with western tastes for a home in the sun, says Tara Loader Wilkinson, who edits Billionaire magazine in Hong Kong. If just a handful take an interest, the island paradise will be firmly on the holiday-home jet-set map.
● Foreigners in the Maldives must own property through a Maldivian company. This is set up using a local solicitor, who will also check the title deed of the property against the government record
● Properties are sold with leases of up to 50 years and buyers should check how many years remain. For a fee the developers will extend leases for 49 years
● The company pays a 12 per cent goods and services tax. Income and capital gains are taxed at the business tax rate of 15 per cent
● Direct flights connect London with the Maldives in about 10 hours
What you can buy for . . .
$3.5m A one-bedroom villa, Soneva Fushi
$5m A private island without a house
$10m An artificial island with villa and pool
Hugo Cox was a guest of Soneva Fushi
Photographs: Robert Harding/Alamy; AFP/Getty Images
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