How Can a Foreign Investor Acquire Rights to Develop a Resort Island in the Maldives?

A Practical Legal Guide for Foreign Investors

24 July 2026

Introduction

The Maldives has been synonymous with luxury resort tourism since the industry’s inception in 1972. Over five decades later, the archipelago remains one of the world’s most sought after resort investment destinations, commanding some of the highest average room rates and occupancy levels in the global hospitality market. For the foreign investor considering an entry into this market, the first question is a straightforward one: how does one actually acquire the right to develop a resort island?

The answer lies in a leasehold framework. Land in the Maldives cannot be purchased outright for tourism development. Instead, the Government grants long-term leases over uninhabited islands (or land and lagoons) designated for tourism purposes. These leases are governed principally by the Maldives Tourism Act (Law No. 2/99) and its successive amendments.

This publication provides a practical overview of the legal pathways available to a foreign investor seeking to acquire resort development rights in the Maldives, the key terms of the lease framework, and the critical due diligence and structuring considerations that should inform any investment decision.

Resort Islands Are Leased, Not Sold

A foundational principle of Maldivian tourism law is that resort islands are leased by the Government, not sold. Under Section 5 of the Tourism Act, islands and lagoons designated for tourism development are leased to investors who then develop and operate them as tourist resorts. The investor acquires leasehold rights — the right to develop, occupy, use, and derive revenue from the island for the duration of the lease — but the underlying land remains Government property.

The lessee may occupy the island, mortgage or assign the leasehold rights, and sublease the resort from the date the lease agreement is entered into, subject to the terms of the lease agreement, the Tourism Act, the Regulation on Grant of Rights of Resorts (Regulation No. 2010/R-14), and the approval requirements discussed later in this article. However, the resort may only be operated as a tourist establishment after it has been developed in accordance with the lease terms and the guidelines determined by the Ministry of Tourism, and an operating licence has been issued under the Tourism Act.

Pathways to Acquiring a Resort Island

There are several distinct routes by which a foreign investor can acquire the right to develop a resort island in the Maldives. These can be broadly categorised into primary acquisition from the Government and secondary acquisition from an existing leaseholder.

Route 1: Open Bidding (Public Tender)

The default mechanism under the Tourism Act is a public tender conducted by the Ministry of Tourism. Under Section 5(a)(1), islands, land, or lagoons designated for tourism are leased to the party that submits the best-qualified bid in accordance with pre-established procedures. This has historically been the primary route for new resort island allocations.

In a public tender process, the Ministry of Tourism announces the availability of one or more islands, publishes the bid criteria and evaluation methodology, and invites proposals. The Government evaluates bids on the basis of financial capability, the quality of the proposed development, and the acquisition fee offered. The island is awarded to the best-scoring bidder.

Route 2: Closed Bidding (Unsolicited Proposals)

The Eighth Amendment to the Tourism Act introduced a second route: the submission of an unsolicited proposal directly to the Ministry of Tourism, specifying the details of the project planned for a particular island, land, or lagoon. This is commonly referred to as “closed bidding.”

An island may be leased through this route only if the following criteria are satisfied:

  •   the island, land, or lagoon is environmentally suitable for the proposed project;
  •   the applicant makes a lump sum payment of the acquisition fee determined by the Ministry of Tourism; and
  •   the applicant is financially and technically capable of carrying out the proposed project.

The Eighth Amendment further requires the Ministry of Tourism to ensure that proposals are assessed equally and openly against financial and technical standards set by regulation, that permission is obtained from the President’s Office before the lease is granted, and that detailed information about the lease is shared with the Anti-Corruption Commission and the Auditor General’s Office after execution.

The Regulation on Submission of Proposals for the Lease of Islands, Land and Lagoon (Regulation No. 2016/R-69), enacted pursuant to the Eighth Amendment, sets out the detailed policies and procedures for closed bidding. Key requirements under this regulation include:

  •   submission of a proposal covering financial information, a human resources plan, a marketing plan, and a CSR project proposal valued between USD 500,000 and USD 1,000,000;
  •   the applicant must be an individual of at least 18 years of age (who may be a foreign national), or a company or partnership that is either registered in the Maldives, re-registered in the Maldives, or registered outside the Maldives (in each case, even if its shareholders or partners are foreign nationals); and
  •   proposals are graded on a points-based system (Human Resources Plan: 30 points, Marketing Plan: 25 points, Financial Plan: 25 points, CSR Proposal: 20 points), and a score of more than 60 points is required for approval.

If the Ministry of Tourism approves the proposal and the President’s Office consents, the applicant receives an offer letter specifying the acquisition fee, payment terms, and island details. Upon compliance with the offer letter conditions, the parties proceed to execute a lease agreement.

Route 3: Cross-Subsidisation

The Tenth Amendment to the Tourism Act introduced a further pathway: cross-subsidisation. Under this model, the Government awards a land, island, or lagoon to an investor or project financier in consideration for that party financing a project carried out for the purpose of achieving an economic, social, or other important policy objective of the Government — for example, funding a public housing project on an inhabited island.

The investment amounts expended on such a project are deducted from the lease acquisition cost and the land rent payable for the tourism lease. The minimum investment threshold is determined annually by a Presidential decree published in the Government Gazette. A cross-subsidisation lease may initially be granted for a maximum of 50 years, with the option to extend by an additional 49 years (totalling up to 99 years) upon payment of the applicable extension fees, provided the allocated project has been completed.

The cross-subsidisation agreement must include provisions granting the Government the authority to repossess the leased island if the investor or project financier fails to complete the development works under the awarded project.

Route 4: Acquiring an Existing Resort (Secondary Market)

A foreign investor may also acquire rights to a resort island by purchasing the leasehold interest from an existing leaseholder, rather than obtaining a fresh lease from the Government. This can be structured either as an asset deal (transfer of the head lease itself) or as a share deal (acquisition of the shares in the company that holds the lease).

Transfer of Head Lease (Asset Deal)

The transfer of head lease rights is governed by the Regulation on Grant of Rights of Resorts (Regulation No. 2010/R-14) and its successive amendments. The process requires submitting a lease transfer application form to the Ministry of Tourism accompanied by board resolutions from both the transferor and transferee, and a copy of the draft sale and purchase agreement.

The lease transfer fee varies depending on the development status of the resort. A fee of USD 50,000 is payable for the transfer of an operational resort, while a reduced fee of USD 10,000 applies where the transfer takes place before the development of the resort has been completed. No transfer fee is payable where the leasehold rights are sold as a result of a bank loan default by the leaseholder.

Critically, the Ministry of Tourism will not approve the transfer until the transferor has settled all debts and claims relating to the island (invited via a public notice gazetted by the Ministry), all Government dues have been paid, and where the island is mortgaged, the mortgagee’s consent has been obtained.

Share Acquisition (Share Deal)

Following the Eleventh Amendment to the Tourism Act and the Sixth Amendment to the Grant of Rights Regulation, the requirement to obtain the prior written approval of the Ministry of Tourism for the transfer of shares in a lessee company has been removed. 

A share deal may be attractive to investors seeking to preserve the existing lease terms and avoid triggering the head lease transfer process. However, the investor inherits the full legal and compliance history of the target company, which makes thorough due diligence essential.

The Lease Agreement: Essential Terms

Whichever acquisition route is followed, the arrangement will culminate in a lease agreement between the Government and the lessee. Section 6 of the Tourism Act prescribes the mandatory contents of this agreement:

  •   the identity of the island or lagoon being leased;
  •   the period of the lease;
  •   where a specific construction period is granted during the lease term, the construction period and the date by which resort operations must commence;
  •   the circumstances warranting premature termination of the agreement and the procedures to be followed;
  •   the amount of the lease rent and the manner of payment;
  •   the procedures to be followed in the event of a sublease of the resort or transfer of management to a third party; 
  •   the procedures to be followed in the event of a breach of the agreement by the lessee; 
  •   the procedures governing any sale of the investment made on the island or lagoon or transfer/sale of the lessee’s leasehold rights to a third party;
  •   the procedure, pursuant to Section 6-1 of the Tourism Act, for extending the construction period granted under the lease agreement, and for the deferral of land rent and fines during any such extended period; 
  •   the procedure, pursuant to Section 6-2 of the Tourism Act, for determining and extending the lagoon boundary of the leased property; and
  •   the procedure, pursuant to Section 45-1 of the Tourism Act, for temporarily closing an operational resort for redevelopment, including the permitted redevelopment period and the deferral of land rent and fines during any such closure.

The lease agreement is the single most important document in any resort investment. Investors should ensure that it clearly addresses development timelines, performance benchmarks, rent review mechanisms, force majeure provisions, and the investor’s rights upon expiry or early termination.

Foreign Investment Requirements

The Tourism Act provides that no foreign party may engage in any tourism-related activity in the Maldives except after entering into a foreign investment agreement as prescribed under the foreign investment legislation and registering the investment with the Ministry of Economic Development, Transport & Trade. Foreign investors must therefore ensure compliance with both the Tourism Act and the applicable foreign direct investment framework.

The Maldives foreign direct investment framework permits 100% foreign ownership for tourist resort investments. This means a foreign investor may incorporate a wholly foreign-owned Maldivian company to hold the resort lease and, through that same company, carry out all resort-related services – including hotel management, guest shop operations, spa, dive centre, watersports, and transfer services – without the need for a local partner.

Due Diligence Considerations for Secondary Acquisitions

Where a foreign investor is acquiring an existing resort through either a head lease transfer or a share deal, comprehensive due diligence is essential. Key areas of inquiry should include:

  •   Lease status and tenure: verification of the remaining lease term, any extension rights, and compliance with all lease conditions including development timelines and rent payments;
  •   Government dues: confirmation that all land rent, taxes, fines, and regulatory fees have been settled;
  •   Third-party claims: the Ministry of Tourism’s public notice process will flush out creditor claims against the island, but the investor should independently verify the position;
  •   Mortgage encumbrances: whether the leasehold interest is subject to any registered mortgage, and if so, whether the mortgagee’s consent to the transfer has been obtained;
  •   Environmental compliance: any outstanding EIA conditions, environmental violations, or remediation obligations;
  •   Regulatory compliance history: operating licence status, service quality compliance, and any pending or historical fines imposed by the Ministry of Tourism; and
  •   Employment and labour compliance: settlement of employee claims, compliance with the Employment Act, and continuity obligations.

Operating Licence

No resort may be operated in the Maldives without first being registered with the Ministry of Tourism & Civil Aviation and obtaining an operating licence. Under Section 16, a licence is issued to establishments that have completed construction in accordance with Ministry guidelines and made available the services the Ministry has determined to be necessary. Operating licences are generally issued for five-year periods and must be renewed prior to expiry.

Conclusion

Acquiring the right to develop a resort island in the Maldives is a structured, Government-regulated process rooted in the leasehold framework of the Tourism Act, its amendments, and the regulations made thereunder. Whether entering the market through a fresh Government tender, a closed bid, a cross-subsidisation arrangement, or a secondary market acquisition, the foreign investor must navigate a layered set of legal, regulatory, and commercial requirements.

The key to a successful resort island investment lies in understanding the available pathways, conducting rigorous due diligence, structuring the transaction appropriately, and engaging experienced local legal counsel who can guide the investor through the regulatory landscape from initial opportunity identification to lease execution and beyond.