Govt proposes 99-year leases for integrated real estate development zones

The government has submitted a Real Estate Business Bill to Parliament proposing a maximum lease period of 99 years for integrated real estate development zones, alongside provisions regulating property developers, real estate transactions and foreign investment.

The bill was submitted on behalf of the government by Henveiru North MP Ahmed Aifan. Its first reading is expected to take place during Parliament's afternoon sitting on Monday.

The proposed legislation seeks to establish a regulatory framework for the development of the Maldives' real estate sector, including the registration and licensing of developers, protection of property buyers and monitoring of development projects.

It also sets out the rights and responsibilities of developers and introduces procedures for registering real estate projects.

Under the bill, an area designated as an integrated real estate zone may be leased to a master developer for a maximum of 99 years.

Master developers would be permitted to sell leasehold rights to properties developed within these zones, subject to the conditions established under the legislation.

The bill proposes a surrender-and-regrant model under which eligible buyers would receive a new 99-year leasehold interest following the registration of their property purchase agreements.

It also states that the expiry of a master developer's lease would not affect leasehold rights already granted to purchasers within the development.

The proposed legislation would establish a Property Regulatory Authority under the Ministry of Housing to oversee the real estate sector.

The authority would be headed by a chief executive officer appointed by the President on the recommendation of the Housing Minister. The appointment must be made within 60 days of the law coming into force.

The Housing Minister would be accountable to Parliament for the authority's operations.

Its responsibilities would include licensing developers and real estate brokers, registering agents, approving development projects and monitoring compliance with approved plans and construction schedules.

The authority would also establish development standards, classify developers, monitor project progress and maintain registers of freehold and leasehold properties.

The bill further provides for the registration of property rights and the issuance of property registration documents.

National real estate policies would be determined by the President on the advice of the relevant minister.

The proposed law requires master developers to pay a land premium of at least 10% of the value of properties developed and sold within an integrated real estate zone.

A lease registration fee of 4% would also apply when leasehold rights are sold or transferred. The fee would be calculated on whichever is higher: the property's market value or its transaction price.

Apart from the lease registration fee, services provided by businesses operating within integrated real estate zones would generally be subject to the tax rates applicable under tourism laws and regulations.

However, businesses providing goods and services commonly used by Maldivians could be taxed at the rates applicable to non-tourism sectors.

The bill would permit integrated real estate zones to be leased to companies owned by Maldivians, foreign nationals or a combination of both.

Eligible developers would also include companies with government shareholding, majority state-owned companies, joint ventures and consortiums.

Following the award of a lease, details of the transaction would have to be submitted in writing to the Anti-Corruption Commission and the Auditor General's Office.

Master developers would be permitted to manage and maintain the zones and sell leasehold rights to properties developed within them. Subleasing portions of the land would require approval from the relevant ministry.

The legislation also proposes restrictions on the concentration of property rights among foreign nationals.

Under the bill, no more than 25% of the total land within an integrated real estate zone could be registered to nationals of any single country or legal entities owned or controlled by nationals of that country.

It would prohibit the sale or sublease of property rights to nationals of countries whose citizens are not permitted to enter or reside in the Maldives under immigration or other applicable laws. The restriction would also extend to entities owned or controlled by such nationals.

Foreign nationals purchasing property within these zones would not acquire any entitlement to Maldivian citizenship.

Master developers would be responsible for providing infrastructure and public facilities within integrated real estate zones.

The bill specifies that such developments must include a tertiary hospital, sufficient mosques, shopping centres, retail outlets, cafés, restaurants, recreational facilities, parks and public spaces.

Developers would also be required to establish roads, pedestrian areas, public transport systems and sea or air transport connections linking the zones with other parts of the Maldives.

The legislation would require developers to give preference to Maldivian businesses, contractors and service providers during construction and development.

Priority would also have to be given to employing Maldivians in businesses operating within the zones.

The bill prohibits activities within integrated real estate zones that are unlawful under Maldivian legislation.

It specifically restricts businesses or services facilitating activities prohibited under Islamic Shariah, including gambling.

The proposed law would also prohibit facilities for religious practices other than Islam, including places of worship and religious celebrations.

Importing, selling or using alcohol, alcoholic products, pork and pork products would not be permitted within these zones.

The submission of the bill comes as the government plans to lease 500 hectares of Ras Malé to UAE-based Eagle Hills for the development of the Maldives Waterfront and Marina project.

The project is planned to include branded residences, resorts, a marina, restaurants, a waterfront promenade and leisure and wellness facilities.

According to projections associated with the development, the phased project is expected to attract more than USD 30 billion in foreign investment, including USD 18 billion in net investment.

The project is also projected to generate approximately 54,000 employment opportunities.

Eagle Hills has previously stated that the development could attract more than one million visitors annually and generate USD 2 billion in annual tourism revenue from the area.

These figures remain projections associated with the proposed development.

The Real Estate Business Bill will require parliamentary approval and ratification before its provisions can take effect.