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A private island is not beyond reach
You can own one at less than the price of an average one-bedroom flat in London
Suparna Goswami Bhattacharya
October 21, 2015: For most of us, owning a private island has been no less than a very-expensive dream, which more often than not we do not pay much attention to. Instead, we concentrate on more achievable things like owning a plush flat or a fancy car. However, now you can own a private island at less than the price of an average one-bedroom flat in London. Come to think of it, 65% of private islands currently for sale are priced below $500,000 (£325,000).
There are close to 200 countries. Of these, only around 40 can lay claim to one or more private islands. Moreover, only 5% among these are considered to be of good quality — easily accessible, have utilities like electricity, water on site, stable political regime and access to medical facilities. Yet, despite the limited numbers, the prices of these islands have not accelerated much over the years.
In the early 2000s, owning a private island was nothing short of a trophy for millionaires. However, post the global financial crisis, the recession reduced demand and the wealthy started looking for safer havens, such as high-end homes in London, Hong Kong and New York, as a means to protect their wealth. “Weaker demand has led to slower sales volumes, which in turn has meant prices have dipped,” says Kate Everett Allen, Partner, Knight Frank LLP.
Other property assets which high net worth individuals (HNWIs) bought during this period were lifestyle homes, such as ski homes, vineyards and high value homes on established islands such as the Caribbean, Mallorca, Ibiza and Bali, where the infrastructure is already in place.
Richard Vanhoff, island and resort specialist in Australia, feels “the global financial crisis provided a correction in the market place”. Private islands off the west coast of Scotland and Ireland continue to change hands for as little $470,000 and some, in parts of Canada, Fiji and Belize, go for significantly less.
Though islands which are considered attractive do generate interest, their sale can be a lengthy procedure as there are only a finite number of individuals who can afford them. Moreover, the ‘millennial’ generation, according to Allen, is showing a preference for renting, rather than buying private islands. “This is primarily because they don’t want to be tied to one particular area and also because it can be quite onerous to find a manager to maintain a private island between visits.”
Popular island destinations
British Virgin Islands
Farhad Vladi of Vladi Private Islands says the younger generation is more into renting of islands as they prefer to avoid responsibilities. “HNWIs also tend to rent islands as they typically stay there for approximately 10 days. With so many beautiful, fully-developed rental islands on the market, we’re certain this trend will continue to develop,” he says.
Although demand from HNWIs may have softened since 2008, correction in prices have led to increase in demand from NGOs, governments and conservationists, as they look to protect ecosystems and preserve their land.
Three years ago in the US, a national conservation organisation issued a strong plea to the public for donations to purchase an island. The public responded enthusiastically and together with the efforts of numerous government bodies and NGOs, it raised the $5,125,000 needed to purchase 97 acres of land and a small island.
In fact, governments and NGOs have long been a key buyer of private islands, but the number of purchases, particularly in North America, has increased significantly. According to Vladi Private Islands, between 2000 and 2004, governments, NGOs and conservation organisations bought 24 private islands. Between 2010 and 2014, this figure had increased to 92. North America alone saw an increase from 8 to 37 purchases in that period. Most purchases are driven by a desire to conserve the undisturbed ecosystems. These set of new buyers are definitely a hope for private island dealers, as they are generally recession-proof.
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