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Private islands are the new rage among the wealthy. And you don't have to be super-rich to buy one.
It's the ultimate ego trip. A private slice of heaven made up of white sandy beaches, crystal-clear waters and complete privacy is fast becoming de rigueur for many wealthy people from Hollywood A-listers to corporate moguls.
Little wonder then that private islands now figure quite prominently in the real estate market. One of the first companies to realise their potential as a novel toy for the wealthy was a Toronto-based one called Private Islands Inc. Launched in 2000, the company has over 500 such properties listed on its website.
According to CEO Chris Krolow, the number of isles on the market has jumped threefold since 2006 - a demand driven by the new rich from China, India and the Middle East. "We get over 100 calls a day, " says Krolow. "Many come from China and the Middle East, not so many from India. However, the demand from India has definitely picked up in the last two or three years - it's usually companies based there who come looking. There are some incredible islands in the Asia South Pacific region, and these are driving demand. "
Krolow says that the typical buyer is one looking for his second, third or even fourth vacation home, and privacy is a must for him. He then makes a surprising assertion - that one doesn't have to be "very rich" to own an island. "For most people, it's a clever investment because some islands are really reasonably priced, " he says. "You just need to be determined and entrepreneurial. " A million dollars is a nice little figure to start island-hunting according to him.
Price, however, is just one aspect. There are a multitude of factors that could influence one's decision to buy. Most buyers can expect some trouble in paradise - no electricity supply, bureaucratic red tape, the presence of endangered species such as sea turtles and island foxes and high maintenance costs. An island may look very appealing in pictures but prospective buyers need to consult a professional broker and ask the right questions about it: details like the depth of the water (important for the boat), for instance, or whether it comes with a permit to construct.
"If you can't build on the island, then it has no value. Islands that come with old houses are more valuable because then you don't need new building permits or environmental permission, " says Krolow.
Buyers need to take weather conditions into account too. "A couple wanted to check out three islands in the Bahamas, but it took them 12 days just to take off because of the weather and lack of chartered flights, " Krolow recalls. Distance from health facilities is also often a deal-breaker.
Most islands require a lot of work. Developing an airstrip will set you back by half a million to one million dollars. Add a jetty and costs escalate. Besides, it is really expensive to maintain islands. Aga Khan IV owns a private island in the Bahamas where the bill for the back-up generators alone is $1 million a year. And another $50, 000 for the upkeep of the island and this is what prospective buyers have to keep in mind. "The idea of a private island may sound very romantic and exotic but you can't overlook realities, " says Krolow.
Microsoft billionaire Paul Allen discovered that all the technology in the world didn't make it any easier to have his island situated near Anacortes, Washington, fitted with electricity. Allan Island, which he bought in 1992, was priced at $25 million in 2005 but is now offered for around $13 million, which will get a buyer 292 acres, an airstrip, dock and luxury log cabin but still no electricity.
While most Americans prefer freehold islands in the Bahamas, Caribbean and British Colombia, the trend of leasehold islands is slowly coming into its own in Asia.
A leasehold agreement means that you don't own the island but can set up residence there. A lot of companies are working with the governments in Thailand, Philippines and Maldives to set up villas and resorts.
"This is a great new model that's very popular and makes these islands highly sought-after vacation homes, " says Krolow, "because it means less of a bureaucratic headache for the buyer, leaving him to enjoy the luxury of island-living."
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