Land rent for plot leased to develop 5 star hotel in Male' reduced to $24,900

Land rent for the plot of land allocated to build a 200 bed – 5 star hotel on the eastern side of Dharubaaruge in the capital Male’, has been decreased to $24,900 (MVR 383,958) per year.

According to reports, the government had earlier leased the 3,324 square meter plot to Shangrila Maldives for a 25 year period, for an average rent of $5100 per bed per year, which translated to an aggregate of $761,000 (11.73 million) per year. Following adjustments as per the newly revised Tourism Act, this rent has now been decreased to $24,900 per year.

The $761,000 rent with Shangrila Maldives was agreed in 2010, before the Tourism Act was amended.

Senior Legal Officer at the Tourism Ministry Faseeh Zahir said that changes to the Tourism Act included the abolition the bed tax and an increase in land rent, which now has to be determined at a rate per square meter. He said that as a result, the rent for the plots leased to run Nasandhura Palace Hotel and Shangrila Maldives have both been decreased dramatically.

“The changes to the Tourism Act have resulted in a decrease in revenue from all plots granted to develop hotels and resorts. Before the amendments, Shangrila and Nasandhura had both proposed bids on a bed-tax basis,” he said.

He said that the land rent for the Shangrila Maldives plot, located on the eastern side of Dharubaaruge, was being deducted from the $5 million deposit they had placed when they won the plot in 2007, and that the government had delayed the land rent payment after the deposit was exhausted.

“With the new Tourism Act, bed tax has now been replaced by land rent. This is a great loss for the State,” Faseeh said.

Government has decided to sell the Shangrila plot to Crecendas, a Singaporean company who is currently developing a tourist resort in Seenu Hankede in the south of the country.

Located on the eastern end of the capital city, the bid for the plot of land was proposed by a local company named Male’ Investment Pvt. Ltd.

The plot’s initial lease agreement with Shangrila Maldives agreed to establish a public limited company, of which 30 percent of shares to be held by the public.

In relation to Shangrila’s request to transfer all rights of the lease agreement, Tourism Ministry recently published an announcement seeking any claimants of debts or issues regarding the plot to come forth before the 11th of August 2013.

Shangrila had earlier established a hotel in the capital under their brand Holiday Inn, which was soon rebranded as Traders Hotel. The company also operates a tourist resort in Seenu Vilingili in the south of Maldives.