Owning on home on these Caribbean islands is one of the ultimate trophy property assets, according to a new report listing the world’s top 20 islands for real estate investment.
The report, produced by Candy & Candy, Savills World Research and Deutsche Asset & Wealth Management, analysed the global island real estate market based on volume of luxurious property holdings, transport links to mainland markets, sources of capital and occupiers, tax regime and real estate prices.
‘A private island is the ultimate trophy asset and financial return is not the primary motivation. These buyers are seeking the ultimate hideaway and a chance to shape their own world. For them being remote and private are priceless,’ said Nicholas Candy, chief executive officer of Candy & Candy.
With the price of a typical four bedroom property in Bermuda now exceeding $4 million, this sought after island has the highest concentration of ultra wealthy property holdings of any island outside the United States.
Indeed, the list is dominated by several Caribbean islands with the Bahamas, British Virgin Islands and Antigua all featuring in the top five based on their proximity to the huge wealth generating market of the United States, the appealing climate and favourable business environment.
Europe’s safe haven, the Channel Islands also features in the top five island locations where property prices have remained resilient during the global economic crisis.
‘The last 10 years were the decade of prime urban property investment; the next 10 years will see a growing appetite for island real estate investment and lifestyle,’ said Yolande Barnes, director, Savills World Research.
‘For the world’s wealthy, the pinnacle of achievement is to own what is exclusive and rare, so an island property goes hand in hand with a luxury apartment in a prime city,’ she added.
North American islands including the Hawaiian Islands, the Florida Keys, Nantucket and Martha’s Vineyard also feature heavily in the top 20 list of hotspots where the second home market is buoyant and prices have exceeded $2 million for a four bedroom property.
The report identifies four distinct island real estate markets; private islands which are the ultimate trophy asset; leisure islands for second, third or fourth homes; relocation islands for a permanent lifestyle or business move; and city linked islands for island life but with city convenience.
‘When it comes to owning island real estate, there are many motivations driving these purchases. A purchase of passion or for social cachet, a business or relocation move, or a philanthropic desire. Islands can be safe havens during global economic unrest and premier city-linked island real estate can cost up to four times that on the mainland,’ explained Barnes.
As small segment of the real estate market, private islands represent the ultimate trophy asset, behaving more like fine art or precious jewellery, operating quite independently of the wider property world.
According to Salman Madhi, head of Key Clients Relationship Management at Deutsche Asset & Wealth Management, there are three main categories of buyer in today’s market. Firstly developers looking for opportunities to create luxury resorts, wealthy conservationists working in tandem with governments to preserve wildlife havens and high net worth individuals who consider the urban playground to have become too accessible and lost its glamour.
The report also identifies a number of factors that are changing the shape of island real estate markets including increasing global wealth, new transport infrastructure and philanthropy and conservation.
The global ultra high net worth population is forecast to grow by 22% by 2018 which will fuel demand for alternative real estate, particularly with a boost from Asia, the region where it is set to grow fastest.
‘The lower end of the luxury island market is also set to explode as young money buys into ultra prime property and resorts on the world's most sociable islands,’ said Barnes.
‘This spurt of activity will also drive demand at the top end of the market. The uber wealthy, in search of the ultimate adventure, will seek out the rarest opportunity, paying a premium for scarcity,’ she added.