Ras Malé project initiated by Eagle Hills under private sector proposal, minister says

The Maldives government expects to receive approximately USD 3.1 billion over 10 years from the Maldives Waterfront and Marina project proposed by UAE-based Eagle Hills for Ras Malé, Minister of Construction, Housing and Infrastructure Dr Abdulla Muththalib has said.

The minister disclosed the projected revenue and details of the agreement in a written response to Galolhu Uthuru MP Mohamed Ibrahim, who had requested clarification on the terms of the development amid public concerns over the project.

In a letter dated 15 October, responding to questions submitted by the MP on 29 September, Muththalib confirmed that the project was initiated through a proposal submitted by Eagle Hills under the Private Sector Initiated Proposal framework, pursuant to Section 10.22(n) of the Public Finance Regulation.

The MP had sought clarification on 20 matters relating to the project, including the proposed 99-year lease, financial returns to the state, legal safeguards and the implications for the government's housing policy.

The minister's responses were published on the MP's website.

Muththalib said the government had so far signed a Commercial Terms Agreement with Eagle Hills and that a final agreement would be concluded following further negotiations, subject to the Constitution and laws of the Maldives.

Responding to questions about the proposed 99-year lease, he said the terms would be finalised in accordance with the country's legal framework.

Under the commercial terms, Eagle Hills would be required to pay the government 10% of the developer's gross revenue as a land premium.

The minister said the arrangement was expected to generate approximately USD 3.1 billion over 10 years, with the amount potentially increasing as property values rise.

Of this amount, USD 500 million would be paid in advance towards a housing development project, according to the minister.

He said the government had assessed the financial benefits of the arrangement using the formula applied to calculate lease acquisition costs for tourism developments.

Muththalib also said the state would receive tax revenue from economic activities undertaken in Ras Malé.

Unlike tourism developments, the project would not be granted import duty exemptions, he added.

The minister said the government would not incur any financial obligation for the development of 5,000 housing units planned by Eagle Hills in Hulhumalé.

He also outlined arrangements intended to ensure that foreign currency generated through the development enters the Maldivian financial system.

According to the minister, all payments made by the developer to contractors would be processed through banks established in the Maldives and licensed by the Maldives Monetary Authority (MMA).

Payments to contractors operating in Maldivian rufiyaa would be made after foreign currency had been exchanged through a local bank.

Buyers purchasing off-plan properties from Eagle Hills would initially deposit their payments into escrow accounts maintained at MMA-licensed banks in the Maldives.

The funds would subsequently be released to the developer in accordance with the progress of construction.

Transactions involving the resale of properties in the secondary market would also be required to pass through banks licensed by the MMA.

Muththalib said these arrangements were intended to increase the circulation of foreign currency within the Maldivian economy during both the development and operational stages of real estate projects.

Responding to questions about the possibility of the agreement being terminated, Muththalib said the leasing of land in Ras Malé would be governed by the Constitution, laws and regulations of the Maldives.

He said the agreement would not contain provisions allowing automatic extensions of lease periods.

"The entire project will be carried out in accordance with the laws and regulations of the Maldives," the minister said.

He added that provisions addressing the consequences of the project's failure to reach completion would be included when the main agreement was prepared.

Muththalib also said the agreement would not provide for the transfer of ownership of any land to foreign parties.

He maintained that any land leased under the project would be subject to Maldivian laws and regulations.

The minister further said the Eagle Hills development would not obstruct the government's housing policy in Ras Malé, which was reclaimed to provide housing for Maldivian citizens.

He argued that creating employment opportunities was an important part of establishing a residential community.

According to the minister, the development is projected to generate 54,000 jobs, including approximately 15,000 permanent positions once the project reaches maturity.

Muththalib said the project was being undertaken in accordance with international practices and was not expected to affect the Maldives' relations with other countries.

Responding to questions about revenue forecasts and market projections, he said previous governments had also explored projects involving second homes and holiday properties for tourists.

However, he said the success of such developments depended on providing the services and facilities sought by property buyers.

The minister said comparable developments in other countries had been studied in preparing the Ras Malé project and expressed confidence that the properties could be marketed internationally.

Eagle Hills plans to develop the Maldives Waterfront and Marina project in phases within the urban area of Ras Malé.

According to the developer, the project will include branded residences, resorts, a marina, restaurants, a waterfront promenade, and leisure and wellness facilities.

The company has projected that the development could attract more than USD 30 billion in foreign investment, including USD 18 billion in net investment.

Eagle Hills has also estimated that the completed development could attract more than one million visitors annually and generate approximately USD 2 billion in annual tourism revenue.

These figures remain projections by the developer and have not yet been realised.

The project has attracted public scrutiny over its proposed lease arrangements, financial terms and implications for land use in Ras Malé.