Police are investigating a major fire that broke out in Shaviyani Atoll Milandhoo on Monday night, destroying three dinghies and causing extensive damage to a fibreglass workshop.

According to police, the incident was reported at 11.09pm after authorities received information that smoke was rising from the "Adamkoibe" fibreglass workshop area near the island's airport development site.

The fire was brought under control at around 1am with the assistance of residents.

Police said no injuries were reported. However, three dinghies, fibreglass manufacturing equipment and the workshop premises were severely damaged and rendered unusable.

A resident told Mihaaru News that the fire is believed to have started in a completed dinghy that had not yet been fitted with an engine.

The blaze spread rapidly to nearby vessels, causing extensive losses.

"All of them were completed vessels. The expensive moulds and machinery used to build the boats were also destroyed in the fire," the resident said.

The person speaking from the island said the workshop was operated by a father and son in Milandhoo and that the financial losses are expected to be substantial.

The cause of the fire remains unclear. The resident said it is not yet known whether the incident was the result of foul play or an electrical fault.