|The Bahamas Investor Magazine
June 27, 2007
June 27, 2007
It used to be that a luxury car, a mega-yacht, a private plane and a second, third or even fourth home were good gauges of a person’s financial circumstances. In recent years, however, the bar has been raised. Today, the ultimate status symbol for the ultra-wealthy is private island ownership. And with more than 700 islands and cays, The Bahamas is the ideal place to find one.
Bahamian realtors note that recent years have seen a run on private islands. Small and often undeveloped strips of land that have stood relatively untouched for decades or even centuries are being snatched up at a record pace. Realtor John Christie says that a private island can mean more than fantasy fulfilment for the wealthy; it can actually help generate even more wealth. “A private island is a great investment. In fact, it’s the best in real estate that I can see,” he says, adding “in some cases investors are seeing 100 per cent appreciation in less than a year.”
Christie explains that private island investors generally fall into one of three categories. Some are looking to fulfil a Swiss Family Robinson-inspired adventure, minus the shipwreck, of course. Other individuals and investment groups buy or lease islands with the intent of developing boutique resorts so they can generate even more income. And others are merely speculators.
Movie star Johnny Depp falls into the first group. He discovered the charm of The Bahamas while filming Pirates of the Caribbean II and III and in 2004 he paid a reported $3.6 million for Little Hall’s Pond Cay, a 35-acre deserted island in the Exuma chain. Both he and Ghost Rider star Nicolas Cage, who also owns an island in the Exuma Cays, say they plan to leave their islands as pristine as possible.
Other celebrities who have caught the Bahamian private island wave include country music stars Faith Hill and Tim McGraw, and musician Lenny Kravitz, whose mother Roxie Roker’s family hailed from The Bahamas. A frequent visitor to the island of Eleuthera, he recently purchased a cay off the island’s coast.
Former Minister of Financial Services and Investments Vincent Peet believes that the majority of buyers fall into the second category. “A number of these islands have been in foreign hands for some time and nothing has been done with them,” he explains. “What you find recently is a number of those are now being sold to other, wealthier foreigners who have the capacity to develop them.” Peet says the Bahamas Investment Board, which must grant approval on the sale of any private island to a foreign investor, tends to favour this type of developer because of the potential for an economic boost to surrounding islands.
Indeed, developments are under way throughout the Exumas. The owners of California-based Fry’s Electronics own the Bock Cays archipelago—a collection of eight private islands, including 365-acre Bock Cay, 266-acre Prime Cay, Lignum Vitae Cay, Melvin Cay, Neighbour Cay, Woody Cay, and two small rock islets. They are reportedly working on a $75-million development to include an 18-hole golf course, resort, marina and helicopter pad.
And magician David Copperfield is working his own particular brand of magic on Musha Cay, also nestled in the Exuma chain. Copperfield has big plans for the property and the three surrounding islands he purchased in 2006 for $50 million. The lavish home on the main island has been rented out in the past to celebrities including Oprah Winfrey and Robin Williams for as much as $300,000 a week. Copperfield intends to expand the already impressive amenities to include watersports, magic shows and exotic animals.
Rules and regulations
Government plays a crucial role in private island development. Any foreigner hoping to buy a private island must first face the Bahamas Investment Board. Documents proving financial ability to purchase and maintain the island must be submitted, character and criminal record checks are conducted by the local Security Intelligence Branch through Interpol, and the Bahamas Environment, Science and Technology Commission must review studies done at the purchaser’s expense to ensure that their plans are environmentally sound.
“We have a sacred obligation to the nation to ensure that the government does all it can in its own due diligence for its applicants,” says Peet. “The board is not a rubber stamp. The board is there to review and to make a determination based on what’s best for the country and that is the overriding consideration. We have denied and refused applications before when we were not satisfied or when there was evidence that the person was not fit and proper for The Bahamas.”
Before buying his piece of paradise, Depp consulted the late Marlon Brando who had owned an island in the South Pacific. Brando’s advice: consider the island’s elevation.
George Damianos, president of Damianos Sotheby’s International Realty, says there is much more to be considered. “Certainly elevation is a key factor,” he says, “but you have also to consider the depth of the water surrounding the island to ensure you can bring a boat in and dock it safely. I’d imagine most people buying a private island would be interested in checking out the beaches it has and then there’s the island’s proximity to civilization that must be considered. This is important not only for safety reasons if you’re staying there, but it plays a key role in your ability to develop it.”
One brick at a time
Although land prices alone dictate a certain level of wealth in the private island market, Atlantis casino employee James Frost was able to live out his own island fantasy more than 20 years ago when he purchased a secluded lot of land on Rose Island, a few miles northeast of New Providence.
“It really was a labour of love,” he says of the 2,000-square-foot octagonal hilltop home he built. “I really did it brick by brick, taking supplies over in my 22-foot Mako. I had a caretaker who helped and friends came over on weekends and lent a hand as well.”
The house was one of the first to be built on the island and boasted a helicopter landing pad and a 360-degree view of the ocean. And while Rose Island is divided into multiple lots owned by many different people, Frost says his piece was so secluded it might as well have been its own island.
Frost sold that house about 10 years ago and missed his solitary days on the island, so bought another lot and built yet another home on Rose Island, which he later sold.
Having been through the process twice, Frost, who is a part-time contractor, finds he is often asked to build homes for people familiar with his work. “I don’t do it because honestly I’d have no idea how to cost it out. In fact, I really have no idea what my homes cost at the end of the day. I can say, though, that you’d probably have to take the square-foot cost of building an equivalent house on the mainland and at least double it for building on a private island,” he says. “It also tends to take a lot longer to build because inclement weather can be an even greater hindrance and there is at least one more additional transportation leg to get materials and labour to the construction site.” Frost now works part time for H G Christie Real Estate and is eager to use his first-hand knowledge of private island development to help prospective clients fulfil their island dreams.
Supply and demand
For those in the market to buy a private Bahamian island, the good news is that there are still a few up for grabs, although George Damianos, president of Damianos Sotheby’s International Realty, says “there is much more of a demand than there is supply at the moment.” Three islands in the Bahamian archipelago made it onto the Forbes.com 2006 list of most expensive private islands on the market worldwide.
Most of the islands listed for sale have been in private hands for years. The majority of the islands in the archipelago are Crown Land and government is not in a hurry to sell them off despite the heightened interest. Instead they will give consideration to leasing options that will have to involve Bahamian individuals or the government in some form of joint venture.
That said, for the right price, the right person can own a piece of private Bahamian paradise. Whoever forks out the $23.5 million asking price for 700-acre Little Ragged Island could put the only footprints each morning on 30,000 feet of white-sand beach. Leaf Cay in the Exuma chain comes outfitted with 18 buildings, a 1,500-foot airstrip, underground wiring and a desalination plant. And with six generators and solar power, there will be no need to rough it. The asking price for this idyllic island is $19 million.
Rounding out The Bahamas’ presence on the top 14 list is Coakley Cay, just 15 miles west of George Town, Exuma. The 340-acre island is on the market for a cool $18.2 million. With no sign of supply outstripping demand in the near future, islands like these are sure to remain the ultimate billionaire’s dream.