Lifes a beach
Life’s a beach: Super-rich invest in island life
The growth in numbers of the super-wealthy has driven demand for life on a tropical island, a new study shows.
Bermuda topped the list of the world’s top 20 islands for real estate investment, with the region now containing the highest concentration of island property holdings owned by ultra-high net worth individuals (UHNW), or those as having wealth in excess of $30 million outside the U.S..
The luxury list is also dominated by 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 U.S. according to the report compiled by Deutsche Asset & Wealth Management, real estate firm Savills and luxury property developer Candy & Candy.
With the price of a typical four-bedroom prime property in Bermuda now exceeding $4 million, house prices on the island far outstrip a similar size house in the Bahamas, which are estimated at around $1.7 million.
European tax haven the Channel Islands was the third most popular island destination, where property prices have remained resilient during the global economic downturn.
“Of the $56 trillion pool of wealth held by the world’s super rich families, 25 percent of their investment portfolio is dedicated to real estate – much or which is return-generating for family offices and HNWIs,” the report found.
Islands with city links are amongst the most sought after, with premier city-linked island real estate costing up to four times that on the mainland. Investors looking at property based in islands off the coast of Florida could pay as much as a 90 percent premium on the price of property in its nearest neighboring mainland city.
Entire private islands are a very small part of the real estate market, which operate quite independently of the wider property world according to the study.
“A private island is the ultimate trophy asset. But financial return is not the primary motivation. These buyers are seeking the ultimate hideaway and a chance to shape their own world. For them, the qualities remote and private are priceless,” said Nicholas Candy, CEO, Candy & Candy in the report.
The global UHNW population reached an all-time high of nearly 200,000 in 2013, and is forecast grow by 22 percent by 2018. The growth in wealth will fuel demand for alternative real estate, with a particular boost from Asia, the region where it is set to grow fastest, said Yolande Barnes director of World Research at Savills in the report.
“Second or third generation wealthy individuals, accustomed to money and becoming more interested in its lasting impact, will pay an important role in island markets. We anticipate that a proportion of these philanthropic UNWIs will seek their own “eco domains”, islands where they can restore or maintain whole ecosystems and do their bit for the planet,” she said.
– By CNBC’s Jenny Cosgrave