Maldives expected to see highest ever hotel transaction activity in 2019 – and German investors want a slice of the pie

It has long been billed as a tropical paradise offering unparalleled sandy beaches, incredible diving and high-end cuisine but now the Maldives has caught the eye of cross-border investors, including German hospitality chains, who are on the hunt for ever higher yields.

As a result, the Maldives, which consists of more than 1,000 coral islands in the north-central Indian Ocean, is on track to see the highest ever hotel transaction activity this year, with more than $450m of resort transactions either completed or under offer, according to JLL.

Traditionally dominated by Asian investors, the Maldives is now attracting new sources of cross-border capital from Europe and the US. In first six months of 2019, investments from new sources of capital hit $300m, far outstripping the annual average deal volume of $120m.

‘The tightening of yields in core markets across the globe, particularly in Europe, is causing investors to look further afield in search of higher yielding opportunities,’ said Nihat Ercan, managing director and head of investment sales, Asia, JLL Hotels & Hospitality Group. ‘Our clients outside of Asia are starting to show increasing interest in the Maldives, given its reputation as a sought-after tourist destination. We’re confident that investor demand will continue to rise and lift market sentiment.’

German investors are also wising up to opportunities there. In April, German-based Seaside Hotels & Resorts acquired Finolhu Maldives, a resort in Baa Atoll, for approximately $90m, marking the first acquisition there by a European buyer. JLL Hotels & Hospitality acted on behalf of the seller, Coastline Group of Companies.

‘We have received several enquiries from other German groups, predominantly from the major tour operators,’ Charlie Macildowie, vice president, JLL Hotels & Hospitality Group, told REFIRE. He declined to provide further details.

Interest is being driven by a sharp tick in tourism, despite the political turmoil that has plagued the archipelago for years. Tourism in the first quarter jumped by 15% y-on-y, according to the Ministry of Tourism.

‘With a 12% increase y-on-y in European visitor arrivals last year, European hoteliers see an opportunity to capitalise on the familiarity of their brands with these travellers and tour operators,’ Macildowie said. ‘The sale of Finolhu Maldives to Seaside Hotels & Resorts is our first transaction of a Maldivian resort to a European buyer. In the next nine to 12 months, we expect more of our European and American clients to enter the Maldives hospitality market.’

Even investment behemoths are getting in on the act. In February, Blackstone acquired the Conrad Maldives Rangali Island resort, to be managed by Hilton Worldwide Holdings, for an undisclosed sum.