Foreigners line up to buy land in Socotra

Published on 16 September 2014 in Report
Nasser Al-Sakkaf (author)

Nasser Al-Sakkaf

Gulf investors flock to buy property on the island, despite the challenges posed by investment laws. (Archive photo by Nancy Hendryx)

Gulf investors flock to buy property on the island, despite the challenges posed by investment laws. (Archive photo by Nancy Hendryx)

In spite of Yemen’s deteriorating security situation and a complete collapse of its tourism industry, Socotra Island continues to attract foreigners from across the globe.

The island’s untouched natural heritage, beautiful beaches, and unique flora and fauna that appeal to both - national and international tourists alike.

In recognition of its natural uniqueness, the governorate of Socotra was declared to be one of an overall five protected nature reserves in Yemen in 2000.

Increasing interest in the island comes as a double-edged sword to most Socotrans. They welcome increasing investment in its tourism infrastructure and the jobs it creates. At the same time, investment projects run the risk of undermining the very foundation they were built on—Socotra’s extraordinary nature.

Lacking in a notable industry—or service sector, most investment in Socotra has flown into the building of hotels or the funding of nature reserves.

While tourism in Socotra has existed for a long time, foreign investment in the island’s tourism industry only began to boom five years ago.

Radwhan Al-Socatri, the manager of Al-Socatra Tourism Agency, links this development to the island’s tourism and a lack of government funding.

While essential to Socotra’s tourism industry, there are currently only four hotels on the island, according to Al-Socatri. Three were built by Socotran residents, whereas the fourth one belongs to Yahya Mohammed Saleh, a nephew of the former President Ali Abdullah Saleh.

The number of existing hotels is not enough to host all of Socotra’s tourists, Al-Socatri explains, highlighting the necessity of investing in the island’s tourism sector.

The acute lack of government funding caused foreign investors to step in, buy land and build hotels in Socotra.

The spiralling foreign demand has prompted many Socotrans to sell land at higher prices to foreigners than they do to locals.

This, in turn, caused many foreigners, mostly from Gulf countries, to buy plots of land through local proxies, according to Salem Dahaq, the director of Hadibu district, the capital of Socotra governorate

Mohammed Khalifa, a resident from Socotra, confirmed that so-called “mediators” spread throughout the governorate in recent years, buy land from locals and sell it to foreigners at comparatively cheaper prices.

The buying of land through local proxies is an indication that the building of hotels and the buying of land has gotten out of hand in Socotra, criticizes Al-Socatri.

“The country is busy with political issues which opened the way for foreign investors, whose investment in the governorate largely goes unchecked,” he said, calling for more control.

To mitigate the risks attached to investment in Socotra’s tourism sector, the cabinet issued a decree in November 2013 temporarily putting a stop to the selling of land to foreigners.

It also halted “constructions that were underway, which were located on the coast and in natural areas that are too close to or inside maritime or protected areas.”

The cabinet decree clearly stated that it is only binding until a specially assigned committee comes forth with a catalogue of specific laws to regulate investment in Socotra.

Investment regulation

According to the head of the Land Authority in Socotra, Mohammad Joman, “the governorate of Socotra is a nature reserve; naturally it would have its own law regulating investment.”

Although the cabinet’s decision  led “mediators” who were selling land to foreigners, to disappear, Khalifa agrees that further regulation is necessary.

In Joman’s opinion, regulating the investment process is even more important than the attraction of investors.

“Currently we [the committee] are working on drafting a plan which will be profitable for both the governorate and the country; we will show it to the governorate authorities as soon as we are done with it.”

According to Joman, the committee will complete its work in two months. “The committee has been given absolute authority, its solutions will be binding once they are approved by the governorate,” Dahaq added.

Adel Al-Ashtal, the director of studies at the General Authority for Investment, agrees on the importance of clear investment laws, which he views to be of a mainly pre-emptive nature.

While saying that “the history of investment in Socotra is recent, and until now has not caused much harm,” he highlights the necessity of the committee’s work, explaining that the government needs to develop laws to prevent the future mishandling of investments.

One of the committee’s goals is to specify places in Socotra that are open to investment and up for sale, according to Dahaq.

Al-Ashtal adds that the committee must also designate places for garbage disposal. It is of great importance, he explains, that the pollution of the maritime and wild nature is avoided.

Investments stop momentarily

Some worry that the cabinet decree and the committee’s decision will decrease foreign investment in Socotra’s tourism infrastructure.

After all, “foreigners prefer to buy land near shores and nature areas, which constitute a distinguished location for their hotels,” according to Dahaq.

Dahaq used a Kuwaiti investor as an example of someone who wanted to build a hotel near the shore but had to stop his project once the cabinet’s decision was made.

Like Dahaq, Al-Ashtal is aware of the negative economic implications of the cabinet’s decision. Accordingly, he emphasizes the importance of the committee’s early completion. “The cabinet’s decision supports investment in the governorate but it has to develop solutions as soon as possible so that investors whose businesses have been stopped do not sustain heavy losses.”

While the temporary hold on investment comes as an obvious burden to investors, Socotrans are not as heavily impacted by the cabinet’s decision, explains Al-Khalifa, as most of the workers, especially in the case of larger projects, are not from Socotra.

Investors expect change in future even if they regret the temporary freeze on investments for the time-being. In anticipation of the committee’s decision, they are registering investment projects with the governorate, indicating what land they wish to buy and where they wish to construct buildings.

Despite the decree, Dahaq reports that the number of foreign investors is increasing every day.

Joman confirmed that many foreigners have made official investment requests to the governorate waiting for the committee’s decisions. Most of them are from the gulf countries, he said.