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March 7, 2014 6:24 pm
We associate them with royalty, pop stars, business tycoons and the Hollywood jetset: paradise islands, where the owners rule supreme. In 2009, the Aga Khan bought Bell Island in the Bahamas for $100m – reportedly the most ever paid for a wholly owned private island.
Since the global financial crisis, however, the asking prices of habitable islands have, in general, returned to more reasonable pre-2003 levels (when the market started rocketing). With islands in less sought-after parts of the world now available for as little as $50,000, the notion of buying an island is filtering down to lesser mortals. Interest in private islands has more than doubled in the past three years, according to research by Knight Frank
The reality of owning an island is anything but straightforward, and the asking price is just the beginning. “Most people are looking for islands with infrastructure already in place,” says Edward de Mallet Morgan of Knight Frank. (The agency is selling the 43-acre Buck Island in the British Virgin Islands – which includes a magnificent two-bedroom hilltop house, a pool and docking facilities – for $30m.) “Otherwise, for example, you have to install solar power [for $15,000-$80,000] – or run a cable from the mainland, if you’re close enough. We’re talking long-term investment.”
Buyers have to add to that the cost of a desalination plant (between $20,000 and $100,000, depending on volume), a jetty ($50,000-$100,000), plus the additional costs of transporting materials for construction. In short, private islands eat up cash.
There is also the matter of planning permits, as the Emir of Qatar discovered when he bought the island of Oxia in Greece, after an 18-month Odyssey on a sea of red tape. “It’s a mistake to think you can do as you wish on your own island,” says de Mallet Morgan.
“You are still subject to the laws of the country and permits have to be acquired. In some countries, it is more complicated than in others.”
“There are three main categories of buyer,” says Nic Brennan of Savills, who are marketing the 245-acre Nissos Makri in the Ionian Sea for $18.6m (undeveloped but with an excellent natural harbour, and with licences for seeking planning permission in place).
“There are funds and developers looking for strategic land opportunities; governments who are buying back their islands and often work in partnership with wealthy conservationists to preserve the environment; and private individuals who consider the traditional playgrounds to have become too accessible and lost their glamour, and are seeking privacy and escape. The Mediterranean and Caribbean, in particular, attract the same cosmopolitan mix as the Riviera, while advances in technology and communications make island living more viable.”
Islands in colder climates – such as Canada, Sweden or Scotland – tend to generate more local interest and are priced more realistically, while the Chinese have also entered the market, buying islands off the Pacific coast of Canada for investment purposes.
Farhad Vladi of Vladi Private Islands, a specialist island broker who has completed 2,500 transactions – equating to almost 10,000 islands – since 1972, offers a more sober view of the market. “There is very little turnover at present, particularly among individual buyers,” he says. “A study we conducted with HG Christie on the Bahamas in 2013 showed that, whereas several are available, only one island in that group has sold in the past three years. Or take Nautilus Island off Maine, with a house and pool, which was on the market for $12m,” he adds. “It eventually sold four months ago for around $2m. It was worth around $8m. Prices have been talked up to unrealistic levels over the past four years. Interest is not the same as sales.”
Of the 600 islands that Vladi currently represents, stretching from Canada to Australasia, he says some 20 per cent are sold “off market”, accounting for around 90 per cent of his overall sales to private persons. As with private treaty sales in the art market, discretion is key to wealthy individuals seeking island retreats.
Governments – French, Italian, German and particularly Canadian, to whom he has sold 14 islands in the past three years – currently constitute Vladi’s biggest sales market, followed by developers and conservationists. He is currently offering the iconic Ailsa Craig in Scotland, which has stimulated much interest from nature and conservation agencies for its colony of gannets and blue hone granite quarry, for £1.5m. With a small two-bedroom cottage and lighthouse, it has an annual rental value of £26,000.
“The trend is for individuals to try and sell their islands,” he says, quoting as an example the singer Celine Dion, who has put Íle Gagnon in Montreal, Canada, on the market for almost $27m. He attributes this in part to media attention given to island sales, negating the quest for privacy, and in part to “the Facebook generation that no longer wants the responsibility that goes with owning an island – maintenance costs, environmental issues, susceptibility to hurricanes, etc. Why buy when they can simply rent an entire island, with infrastructure and staff, from $7,000 to $150,000 a week? Sometimes that can be cheaper than staying in a hotel.”
Fuelled by the increase in luxury travel, island rentals are booming, and also help cover owners’ maintenance costs. “But with interest from governments and conservationists, there will be a dwindling stock of islands available for private ownership,” says Vladi, who owns his own island in New Zealand. “I am confident the market will strengthen in time to come.”
For those undeterred by the complications and still dreaming of owning their desert island, the easiest solution is to be like Johnny Depp, who has left his Exumas island in the Bahamas untouched but for a wharf, and stays aboard a yacht. “Every island has its own problem,” says Vladi. “It is a question of which problem you can best live with. It always involves a compromise. There is no such thing as paradise on earth!”
● Choose whether to buy freehold or leasehold. Most islands in Europe, North America and the Caribbean are freehold. In Asia and the South Pacific, most are leasehold
● If buying freehold, it is advisable to insure against expropriation
● Islands off France are scarce, and are priced accordingly
● Consider potential problems such as mosquitoes, monsoons, hurricanes and political instability
● A couple of caretakers will cost about $5,000 a month, year-round
● Safe mooring is essential, as is deep water for larger yachts
● Always rent before deciding to buy
What you can buy for ...
$500,000 An undeveloped five-acre island off Maine, US, with planning permission for a small structure
$1m A 1.6-acre island near Tahiti in French Polynesia, with a small local-style bungalow
$5m A 17-acre resort island in Tonga with 13 upmarket bungalows
$15m An island in the Venetian lagoon, including restored Napoleonic fort and sheltered harbour
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