Maldives on Monday signed an agreement with Abu Dhabi Fund for Development (ADFD) to develop one of its northern atolls as an ultra-luxury tourism zone.

Visiting Maldives tourism minister Moosa Zameer and ADFD Director General Saif Al Suwaidi signed the agreement, which covers the proposed development of the northern Noonu atoll as an ultra-luxury tourism zone, and a USD 60 million grant to develop an international airport and a city hotel at the atoll’s Maafaru island.

Minister Zameer later told local daily Mihaaru that ADFD would act as a facilitator for the ultra-luxury tourism project in Noonu atoll. The fund would direct potential investors to the atoll and brief them about the investment opportunities which are part of the project, he added.

“I’ve already met major real estate developers in UAE and briefed them about the investment opportunities in Noonu atoll for ultra-luxury tourism. They’ve expressed interest. They’ll take a final decision after visiting the atoll in January,” the minister said.

Noonu atoll is located about 180 kilometres north of capital Male, on the southern edge of the Maldives’ northernmost geographical atoll.

Existing high-end resorts in Noonu atoll include the Velaa Private Island, The Sun Siyam Iru Fushi, Cheval Blanc Randheli and the recently opened Soneva Jani. Several new resorts, including those by international hotel chains, are being developed in the atoll.

The proposed ultra-luxury tourism development in Noonu atoll comes amidst a new wave of foreign investments in Maldives tourism, especially by Asian and Middle Eastern giants.

Singapore’s Park Hotel Group has opened its first resort in the Maldives, while major international hotel chains such as AccorHotels have entered the Maldives with two openings and two in the pipeline. Brands like Hard Rock International, Capella Hotel Group, Carlson Rezidor Hotel Group, Emaar Hospitality Group, Mövenpick Hotels and Resorts, Baglioni Hotels, Emerald Collection and Meliá Hotels International have announced their entry to the Maldives as well.

Existing international players are also upping their presence, with Marriott International set to launch Westin brand, Hilton Worldwide to re-introduce its top-end luxury brand Waldorf Astoria, Aitken Spence Hotels and Resorts to introduce its Heritance brand, Minor Hotel Group to introduce its AVANI brand, and LUX* Hotels and Resorts to open its second resort in the Maldives. Centara Hotels and Resorts has also signed a management agreement for its fourth resort in the tropical destination.

Leading local hotel groups, including Atmosphere Hotels and Resorts, Sun Siyam Resorts, and Crown and Champa Resorts, have also announced expansion plans.

Meanwhile, the first integrated tourism developments in the Maldives — Emboodhoo Lagoon project and Rah Falhu Huraa lagoon project — are underway.

However, this rapid expansion of supply has resulted in a slowdown in growth in tourism, after years of double-digit growth. The government has set an ambitious target of attracting 1.5 million tourists by the end of this year, but the country has been struggling to create demand amidst a significant increase in bed capacity.

Along with the new resort openings come the challenge of increasing demand from budget travellers who choose guesthouses over luxury resorts that the Maldives is known for. The guesthouse sector has rapidly expanded with over 450 guesthouses in operation today.

The government has recently announced new steps to maintain a structured growth in tourism, including a slowdown in leasing islands for resort development and increased marketing efforts in key markets such as China and the Middle East in order to reach an ambitious target of a record 1.5 million tourist arrivals this year.