Private islands are often used for tourism business
At first glance, the idea seems strange and impossible. In reality, many apartments in the capital cost more than a private island. According to the international consulting company Knight Frank, prices for private islands start from $30,000 for small ones in Canada and reach $60-70 million for islands in the Bahamas and the Philippines, or $100 million in Mexico.
At the same time, 65% of private islands in the world cost less than $500,000 – this is the minimum budget for buying luxury housing in Moscow. And you can buy an island near Canada by selling an economy-class apartment in the Moscow region.
However, only 5% of all private islands in the world are considered quality real estate: these are properties with good transport accessibility, supplied with electricity and sewage, located in countries with a stable political regime and having developed healthcare. Therefore, one must choose carefully, and for safety reasons, it is also worth checking whether earthquakes occur in the chosen area, and if so, how strong.
“Buying a private island is a very emotional purchase, often changing the buyer’s subsequent life,” says Alexander Lapidus, legal consultant at Oracle Legal Case Management. “Buying an island can be compared to acquiring a work of art, when collectors buy paintings they like and can later consider the purchase as an investment.”
When buying an island, first of all, you need to answer the question of why you need it. If for personal use, you should be guided by your emotions and basic household conveniences, as mentioned above. If buying an island is an investment and it will be used for further resale or conversion into a tourist center, the requirements will be different. First of all, in this case, the location should not be chosen based on personal preferences; it is an important element of the investment strategy.
According to Knight Frank experts, the islands of Central America (Panama, Costa Rica, Belize) and the Asia-Pacific region (Philippines, Tonga) are the most promising destinations for the development of island resort real estate. There is an increase in tourist flows in the Balearic Islands, Mallorca, and Ibiza. Among buyers from Russia, Great Britain, and Scandinavian countries, small islands in southern Europe are in greatest demand. Asia is gaining popularity, but there islands are bought mainly for personal use.
Approaches to legal nuances differ greatly across regions. “There is freehold and long-term leasehold. Islands sold as freehold are more common in Europe and America, including the Caribbean countries, while China or other Eastern countries, such as Thailand or the Maldives, transfer individual islands to foreign citizens only on a long-term lease of 10 to 99 years,” explains Alexander Lapidus from Oracle Capital Group.
Also, attention should be paid to various kinds of “encumbrances”: for example, in some countries, one may be required not to evict local tribes living on the islands. In addition, almost all islands are regulated to some extent by a number of environmental standards and rules. Often there is a ban on construction on the island itself or on the nearby seabed, so it is better to inquire about all the nuances in advance.