Maldives 2.0: Rise of the Township Asset Class

INTERNATIONAL REPORT – Face with a shortage of foreign currency and high debt level, the Maldives has created a new real estate development model that promises to diversify its income stream. Though more of an economic rather than a tourism diversification, the new concept, ‘Sustainable Townships’, stands to widen opportunities for hospitality investors.

Imagine large-scale, masterplanned townships rising on Maldivian islands, where tropical living isn’t a mirage but reality. Picture a self-contained community ensconced in an ecosystem of high-end residences and tourist resorts, world-class healthcare and education facilities, green infrastructure powered by at least 60% renewable energy, and more.

Green-lighted in November 2025, the first permit for such a township was awarded last December to local entity Crystal Holdings, which partners with luxury developer BluRock for a $790 million investment on ‘Project Ayla’, located in Noonu Atoll and set to open by 2028.

Ghaly Murthala, Morteza Capital

Only projects exceeding US$500 million will qualify for the Sustainable Townships status. Developers will receive incentives, including a 5% income tax rate for the first 10 years, and 10% for the following decade.

Not coincidentally, the model comes on the heels of a recently launched residence-by-investment program, offering residency through significant real estate investment in government-approved projects.

“The government is aiming to capitalize on larger capital flows from the region, which also implies that there will also eventually be incentives for foreigners to reside long term in the Maldives,” observed Ghaly Murthala, managing director of Morteza Capital.

A lofty ambition

Current legislation already allows integrated tourism developments across one or more islands or lagoons – think Pontiac Land’s Fari Islands or Singha Estate’s Crossroads Maldives. So, how is the latest model different?

The government is aiming to capitalize on larger capital flows from the region, which also implies that there will also eventually be incentives for foreigners to reside long term in the Maldives.

Ghaly Murthala

Share this quote

A spokesperson at the Ministry of Economic Development & Trade, told Hotel Investment Today, “Sustainable Townships are established under the Special Economic Zones (SEZ) Act, making them legally and structurally distinct from conventional integrated tourism developments. They are designed as multi-sector economic ecosystems rather than primarily tourism-led projects. In addition to hospitality, they integrate residential communities, education, healthcare, and renewable energy infrastructure.

“President Dr. Mohamed Muizzu’s Vision 2040 envisions for Maldives to become a developed nation by 2040, which requires diversification of the economy and within the tourism industry,” the spokesperson added.

As for who would shell out $500 million or more and fancy the idea of creating a township in an archipelago of around 1,190 islands, institutional investors are the likely candidates.

Maldives tourism and real estate investment advisor Khalis Shareef said, “Sustainable Townships unlock multiple revenue streams beyond rooms and dining, allowing for longer-stay economics through residences, education, wellness, and healthcare. This isn’t for traditional resort-only investors. It’s for patient capital, institutional investors, sovereign-linked funds, and developers who are comfortable with the complexity of real estate, hospitality and infrastructure combined.”

Shareef added, “This almost forces consortium models, phased masterplanning, and joint ventures among hospitality operators, healthcare groups, educators and infrastructure players. And that’s actually a good thing – it filters out speculative, undercapitalized developments paper projects that go on hold during the development phase.”

Shareef is seeing interest on Sustainable Townships from developers who are “talking more” about integration beyond tourism to other sectors such as education and staff villages.

Investment advisor Khalis Shareef

Morteza Capital’s Murthala also sees potential opportunities. “We are working closely with investors on structuring projects and developing supporting infrastructure,” he said. “As these developments are standalone on either an island or a lagoon, state-level infrastructure is not available. Hence, developers are responsible for all the infrastructure.”

On whether locations for these townships have been identified, the ministry's spokesperson said there are no pre-designated locations. Developers may propose locations as part of their SEZ application, subject to government evaluation and approvals.

Shareef sees large lagoons, reclamation-capable zones, areas near major transport corridors, and locations that can absorb scale without overwhelming local communities as possible locations.

Success factors

Will the model fly?

Tax incentives matter, but investors care more about policy stability, regulatory clarity, land tenure certainty, exit mechanisms, and confidence in currency and repatriation, opined Shareef.

This isn’t for traditional resort-only investors. It’s for patient capital, institutional investors, sovereign-linked funds, and developers who are comfortable with the complexity of real estate, hospitality and infrastructure combined.

Khalis Shareef

Share this quote

He said right now, the incentives look decent. The Maldives is also experiencing a long period of political stability while investors are confident about the country as a tourism destination. But success still hinges on factors such as “regulatory coherence.” That means no contradictions between tourism, land, environment, immigration, and urban planning laws, Shareef said.

Townships will also fail if locals remain at the peripherals while expatriates dominate, or when environmental governance is not enforced “ruthlessly,” he added. “And they must be livable, not just beautiful. And if they are seen as ‘luxury real estate in disguise,’ they will lose public trust quickly.”

Ghaly believes the key to success is “more clarity on titles and ownership, and tying incentives to measurable goals in terms of sustainability and projects that benefit the local economy.”

According to the ministry spokesperson, land will be allocated through long-term lease arrangements under SEZ provisions and applicable land laws. Ownership, transfers and real estate transactions within the township will be governed by SEZ regulations prevailing property and tax laws, subject to any incentives as designated under the SEZ framework.

The approval process for a Sustainable Township is around 328 days at most. “Nevertheless, depending on the specific circumstances of each case and the timely submission of all relevant documents and assessments, approval may be granted sooner,” the spokesperson said.

A general manager of a 5-star resort in Raa Atoll sees Sustainable Townships as a test on whether the Maldives can think long term, coordinate across ministries, balance investor appetite with national interest, and move beyond tourism as a monoculture.

“If done right, this could be a generational pivot. If done poorly, it becomes just another glossy brochure,” the source added.