Investing in prime resort destinations has long been popular, particularly when they feature good rental yields and capital appreciation, as well as a package of free night stays.
With the return of global visitors following the pandemic, the Maldives, a tropical paradise in the heart of the Indian Ocean, is bouncing back and becoming another attractive market for international property investment.
CBRE Thailand, the local arm of the international property consultancy, believes there is a good opportunity to capitalise on high returns in a market that is currently undersupplied and has high growth potential due to significant increases in international visitors.
"The Maldives property market presents an exciting opportunity for investors seeking to diversify their portfolio," said Praphinleeya Phuengkhuankhan, head of residential sales (ad hoc) at CBRE Thailand. "It is poised for growth after the Maldivian government updated its foreign direct investment policy in 2020, and has unique appeal as a destination for high-end tourism."
Driven by a high-end tourism industry that attracts discerning travellers seeking exclusive and idyllic getaways, the country welcomed more than 1.6 million tourists in 2022, with visitors from Asian countries accounting for 23.7% of the total, data from the Maldives' Ministry of Tourism shows. Nearly 16,000 of those visitors were Thai, up from just under 900 in 2021.
FAMILY MARKET GROWING
The Maldives aims to attract more than 2 million visitors this year, having diversified its target tourist market in recent years. Despite its reputation as a honeymoon destination, family-oriented properties and amenities are growing in number across the Maldives. Average stays have also increased from 6.2 days in 2017 to 8 days in 2022, further demonstrating the destination's strength as an upscale tourism hotspot.
The arrival of the Covid-19 pandemic in early 2020 dealt a significant blow to the Maldives' tourism industry, as it did to most other resort destinations. Arrivals in 2020 fell below 600,000, down from 1.7 million the previous year. However, by the end of 2022, arrival numbers had nearly recovered to pre-pandemic levels. With little competition from other international resort destinations during the pandemic, accommodations were able to fetch higher rates.
In comparison to Bali, another popular resort destination in the region, the Maldives recovered much faster. After the pandemic emerged, occupancy rates in the Maldives fell below 30% in 2020, while the occupancy rates in Bali fell below 20%. However, while the Maldives reached nearly 60% occupancy the following year, occupancy in Bali barely changed from the year before. In 2022, the Maldives maintained higher occupancy levels exceeding 60%.
"Currently, investment opportunities in the Maldives can be found in villa projects and hotel-branded residences, and we are seeing returns of up to 7% in some projects," said Ms Praphinleeya.
"Among the most sought-after properties in the Maldives are Soneva Jani and Soneva Fushi, which offer a unique blend of luxury and sustainability. Soneva Jani, a collection of eight island villas and 51 overwater pool villas ranging from one to four bedrooms, offers vacation villas for purchase, following a change in Maldivian law that allowed resorts to sell subleases to individuals."
GOOD REPEAT BUSINESS
Affluent travellers from around the world visit the Maldives seeking exclusive and luxurious experiences, and exit surveys provided to tourists indicate that repeat visitors are common, indicating high levels of satisfaction with their experiences.
The government's emphasis on sustainable tourism and eco-friendly development is also encouraging for investors interested in socially responsible investments, with various initiatives in place to preserve the islands' natural beauty.
Protected marine areas, reduced plastic waste, and increased emphasis on renewable energy sources are just a few of the ways the government is demonstrating its commitment to environmental, social, and governance (ESG) issues.
As the Maldives continues to grow and attract a wider range of tourists, CBRE Thailand believes that now is the time for investors to explore this emerging investment destination. With a strong post-pandemic recovery, a broadening target tourist market and ever-expanding opportunities for property investment, the Maldives is an emerging global destination for both travel and property investment.