Islands have been well-known for their investment values since the 1920's when Dwight Macdonald Editor of the very first issue of Fortune Magazine in 1926 wrote: "As a symbol of great possession, the privately owned island may yet supplant even the steamship."
In the 1950's many of those haunted by the evils of war, or who had travelled through the South Pacific dreamed of escaping the world to their own private island. The strong increase in sales quickly drove prices up and in 1973 Donald McCormick the author of "How to Buy an Island" wrote: "Many islands have risen in value over the past forty years by more than 500%".
Islands are a limited commodity, and offer an incredible investment as they appreciate rapidly; demand is also an important factor. Indeed, the supply-demand balance is perhaps much more significant than for other real estate as one cannot just create another island. Good islands don't come cheap; they are like diamonds and are a unique one-of-a-kind investment.
So what, you may ask, does an island cost these days? Right now, there are less than a thousand islands for sale worldwide; some have houses, electricity and water, and some have nothing but sand and a few palm trees.
Prices range from as low as $20-30k up to $56m. Over the last 10 years the price of islands in some areas of the Caribbean has increased by up to 300%, that's over 30% per year, a great investment in any terms. The trick with purchasing an island as an investment is to buy in the right area at the right time.
In order to achieve this, you must find an area with all the necessary requirements such as beauty, accessibility, stable government etc but where the market is just beginning.
"The value of an island also depends on various factors, including location, size, proximity to the mainland, accessibility, climate and topography, existing infrastructure like electricity and water supply, other developments, communities on the island, redevelopment potential, political stability of the mainland country and the legal and taxation implications of owning an island," says Gillian Tso, Director of Sotheby's International Realty in Hong Kong.
Sotheby's Tso estimates that the largest supply is "generally off the coasts of Canada, the coasts of New England, and to a lesser extent in the Caribbean, the South Pacific and Europe. Very few are available in South-east Asia." Almost Paradise, by Bee Ong, Property Review, Singapore, July 1998
In 1972 Malcolm Forbes Editor of "Forbes" Magazine paid $1m for Laucala Island, a 1,220-hectare (3,017-acre), palm-covered paradise in Fiji. 'I hate to overuse the word,' Mr. Forbes once wrote, 'but Laucala is idyllic.' 18 years after his death, Laucala was sold for $10m.
Richard Branson bought Necker Island in 1978 for US$303k and spent the next 20 years developing it into his dream home. Today, it is Bali in miniature and it is currently valued at around $106m.
The world-renowned expert on lateral thinking Edward de Bono, certainly an intelligent person has invested in not one but four islands. He owns Green Island of the coast of Mackay, on Australia's Great Barrier Reef, Tessera an island just seven minutes boat ride from the centre of Venice, West Skeam Island in Roaring Water Bay off the coast of West Cork Ireland and a half share of the island of Reklusia in the Bahamas.
As far as I'm concerned, islands are the number 1 choice for property investment for the following reasons:
Limited Availability : Islands are the most limited real estate commodity on the planet. They can't be created and as the world's population grows, less and less become available. Many countries prohibit the sale of islands for security or national interest, which means that the available market for islands is even more limited. This makes islands in countries that allow their sale decidedly more valuable.
Beauty : Today the travel brochures invariably describe every tropical island as "Paradise". We believe them, because we desperately want to believe that it's still possible to find beauty on earth, despite all the damage done by modern civilization.
Mystery : Islands represent an ideal state of 'never-ending happiness,' according to the 'Dictionary of Symbols,' edited by Jean Chevalier. The dictionary defines island as "land surrounded by water". There is something unpredictable about an island; the water which isolates it from the main-land cuts it off at the same time from the banality of everyday life.
Privacy : An island offers the ultimate in privacy. It's your very own castle, protected by the nature's own moat. An island is never liable to property of boundary disputes with neighbours, its boundaries are clearly delineated by its shoreline.
Safety: Again, the very nature of the island, being surrounded by water, gives you the additional safety of being able to keep out those who may threaten the safety of you or your family.
Exclusivity : An island by its design excludes and keeps out others but it's more exclusive in the sense of being special. From the Roman Emperor Tiberius' island of Capri, to Hollywood's stars of today, every person of wealth or celebrity dreams of owning their own island.
Romanticism : For most, there is nothing more romantic, or idealistic than the dream of owning an island. Buying an island is an emotional, not a rational decision, and that's why they sell so well.
Uniqueness : Each island is unique. They all have their own unique characters and appeal. Also each island has its own name and history. They are unlike any other form of property in that they are entire unto themselves.
Prestige : There is no more prestigious property in the world than a private island. Also when buying or owning your own island, the universal law of most countries is that you can rename the island.
Profitability : A recent survey by Forbes Magazine asked 67,842 of their readers where they would invest in a second home? 36% chose a beach house while 32% chose a private island.
That means that 68% of Forbes readers chose either a beach or a private island as their first choice for a second home as an investment. But were you to buy an undeveloped private tropical island and develop it the returns can be even greater. - Cheyenne Morrison.
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