Thursday, February 16, 2017

So....you want to buy an island

Who hasn't dreamed of owning a private island at some point in their lives? Imagine a place where you can escape the maddening crowd, the hustle of life in full swing, and glamorously step out of a seaplane onto your private beach while stewards rush to grab your luggage and white gloved butlers present you with a chilled glass of Champagne. 

Sounds fabulous, right? But get past the daydream, and there's typically more behind it than that. 

Photo credit: SmartOtels



We are all aware of the distinguished list of celebrities that own private islands in The Bahamas; David Copperfield, Johnny Depp, Faith Hill & Tim McGraw, Shakira, Tyler Perry, Eddie Murphy, Nicholas Cage....and those are names you are most likely familiar with. There is also a sleuth of high net worth individuals ranging from investors to politicians to entrepreneurs who own islands in The Bahamas as well.

These people are drawn to private island ownership for the sheer fact that they want exactly what a private island offers, privacy. Plus, telling people you own an island has a nice ring to it, doesn't it?

So the question is, do you have to be among the extremely wealthy to own an island? It depends. If you want to arrive via seaplane and have personal chefs, housekeepers, caretakers, boat captains and the whole nine yards, then yes, you'd be much better off with millions, or even billions in the bank. But what about the rest of us?

I am going to provide you with a bit of personal input because we actually own an island in The Bahamas, and we are far from the elite top 10% in the world. We also have substantial experience with island development, so I'm hoping with a bit of knowledge and information you can decide if you are ready, mentally and financially, to own an island. There's a few articles out there that say you can buy an island for the price of a London flat, and yes that part is true, but what about the costs to build, and the ongoing operations of an island? That's where island ownership vs. civilized urban living differs a great deal.

About 12 years ago, my husband Mark was perusing through the newspaper (before online real estate searches) and found a 6 acre private island listed for sale. Intrigued, he contacted his real estate agent and they went to take a look at it. The owner had passed away and the heir to the property was in California and had no interest in dealing with some unseen property in the Bahamas, so it was listed for a quick sale. It was a beautiful round island with elevations and a few white sandy beaches, so the listing price turned out to be a fabulous deal. With haste, he put in an offer for the island and purchased it. Now he has an island. And I do have to say, it's pretty cool to say that we own a private island.

However, developing an island is a whole other can of worms. Mark and I have spent years in the out islands project managing new construction and renovations in remote locations. We spent two years in construction on a private island in the Exumas and witnessed a budget for a renovation of three guest cottages top out at $8 million, and the service yard which included operations and staff buildings, power and water generator facilities, boat and equipment facilities, etc, max out at $55 million. We also oversaw the construction of a fairly simple beach bar on Little Hall's Pond, a remake of the dive bar Cafe Cabrones from the movie Rum Diaries, which cost the owner $3 million.

The final stages of the construction of the rustic $3m beach bar, Cafe Cabrones

Those are extreme costs, however. It doesn't have to be that expensive. We have toyed with budgets and ideas about developing our island. The island is located in prime bonefishing waters and there are several popular boutique lodges on neighboring islands, so there's investment potential to set up a simple bonefishing camp, or at least just developing it for personal use as a weekend escape, and it wouldn't have to break the bank. Mark's expertise in out island construction makes him the perfect candidate to develop our island, and with a little capital, one day we hope to make the dream come true. 

There are a lot of islands for sale in The Bahamas. It's an archipelago of 700 islands. Some islands are close to civilization, airstrips and amenities, some are far from anything. The Exumas are popular because of their sense of remoteness, but if you travel 20 minutes by boat, you will most likely find a bar/restaurant, marina or a settlement and they are quite close to the main hub of Nassau. Because of these criteria, The Exumas are home to some of the more expensive islands to purchase. Let's say you find a more affordable island for sale off of San Salvador or Inagua - it's going to be a remote island off of a remote island. So you have to consider how far off the beaten path you are willing to go.

You also have to consider what type of personality you and your family are. Do you love peace and quiet? Or can you only handle being alone for a few hours at a time? Part of the reason places like Harbour Island and Hope Town are so popular is because there's stuff to do for the whole family. There's restaurants, bars, night clubs, shopping and water activities all within a short golf cart drive. On an island, unless you truly love being away from it all, you may find yourself going a little stir crazy after a while. If you have the ability to invite your favorite group of friends and family and have your own private beach party every time you visit, that's great, but you also need to consider what kinds of additional housing you are going to build to accommodate them, or if they have the time and financial flexibility to hop on a plane and can be a part of your beach party on a whim.

The cheapest way to own an island is to buy vacant land, but if you can afford it, a turnkey island already in operation may be the better way to go. Choosing to buy undeveloped land will all depend on your enthusiasm, level of patience and the team you choose to help you with the development process.

First and foremost, I would recommend consulting with a qualified quantity surveying engineer who is well versed in building in The Bahamas, prior to even purchasing property. For a consultation fee, they will be able to assist you with construction costing and budgets to give you a realistic idea of what you are in for.

Next, you need to think about the amenities you'd like on your island. Most islands are within range of cell phone service, but for internet you will most likely have to set up some form of satellite service, such as Skycasters or Hughes Net. You will need to generate your own electricity (solar or mechanical generator) and provide your own water (reverse osmosis and/or rainwater harvesting). You need to consider all aspects of construction - is there a settlement nearby that construction workers can commute on a daily basis or do you need to house them on your property? If you house them, you need to consider feeding them and the subsequent kitchen staff, laundry facilities, transportation when they are due for time off, etc. You need to think about how you are going to get supplies, construction materials and fuel to the island, because there isn't a Home Depot around the corner.

Once construction is complete, who is going to look after the island? It would be awfully risky to leave a developed island vacant for security reasons, and in harsh salt water conditions, I can guarantee that things are going to break - often. You don't want to be showing up to your island, ready for vacation, and realize the generator isn't working, or that you have no water.

And now for the actual cost of island ownership. At the time I am writing this, the cheapest islands available for purchase in the Bahamas are around $1m, so let's use that as our starting point and I will provide rough estimates based on previous experience in cost estimating remote island construction projects. The typical needs and wants of an island owner vary greatly; you could get involved in a much more complicated project, or you may be able to build for less if you would like to go more rustic. I am providing an average. The price per square foot is based on all aspects of shipping construction materials, customs & duty and labor, so for decent hurricane rated structures, this is going to be fairly competitive.

INITIAL COSTS
Purchase price - $1m
Legal fees - 1 to 2%
Stamp tax 2.5% (buyer pays half)
VAT 7.5% (buyer pays half)

TOTAL INITIAL COSTS: $1,110,000 to $1,120,000

DEVELOPMENT COSTS
Architect/design team - $100,000
2000 sqft villa @ $400/sqft - $800,000
1000 sqft caretaker/utility building @ $250sqft - $250,000
Generator/electrical & fuel storage infrastructure - $75,000
Watermaker & storage - $75,000
Satellite communication infrastructure - $25,000
Boat - $50,000-$100,000
50' dock - $50,000

TOTAL CONSTRUCTION COSTS: $1,425,000 to $1,475,000

ONGOING COSTS (YEARLY)
Caretaker - $40,000 to $100,000
Additional staff (gardener/landscaping, maintenance staff)- $20,000 to $100,000
Fuel - $25,000 to $50,000
Boat maintenance - $30,000
Facilities maintenance - $50,000
Real property tax (1% of determined value of land + development) -  $24,850

TOTAL ONGOING COSTS (YEARLY): $189,850 to $354,850

If you consider all this, buying an island may not seem quite so on par with that London flat and the standard utilities that go along with it. For many however, this is still obtainable, and as long as you are armed with the information before you go blasting into it, you'll be stepping out of that seaplane onto your private beach before you know it.

Here are some of our favorite islands for sale in The Bahamas

BEST ISLAND FOR DEVELOPMENT

Saddleback Cay, Exumas
$11,800,000

Saddleback Cay is located just north of Norman's Cay in the Northern Exumas. If I could afford this island, I would buy it in a heartbeat. It is the most dynamic and picturesque island I've ever set foot on. The island has rolling hills and some of the highest elevations in the Exumas. It has nooks and bends and twists, craggy rock faces and white sandy beaches. You could find a peaceful, sunny spot in any kind of weather. The island is only 30 miles from Nassau and about 3 miles south of Highbourne Cay Marina. Based on its location and ease of access this island has amazing potential for development.

BEST ISLAND FOR TURNKEY

Bonefish Cay, Abacos
$7,000,000
Bonefish Cay is a 13 acre island located in the Abacos. The island was deserted for many years, but has recently undergone development, turning it into a luxury escape. The owners built five hurricane proof structures and a 200ft jetty. The island generates its own electricity, it has a desalination plant, and is set up with phone, fax and internet. There are three separate strips of white sand beach where you can have an afternoon swim no matter where the wind is blowing from. Several boats and all of the furnishings are included with the purchase. The island is located near Treasure Cay which has daily flights from Ft Lauderdale.



BEST ISLAND FOR FIXER UPPER

Pelican Cay, Abacos
$3,000,000
Pelican Cay is a 5 acre island with 4 picturesque beaches, a deep water marina, an island home, municipal electricity and is only 10 minutes to services and amenities. Located a short boat ride from Green Turtle Cay and a few more minutes to the international airport at Treasure Cay. It offers easy access to the Sea of Abaco or the Atlantic Ocean for world class sportfishing. The private marina and breakwater can accommodate 4 vessels up to 50'. Cosmetic work is needed.


BEST ISLAND FOR AFFORDABILITY 

Bonefish Cay, Andros
$720,000
Open zoned and currently the most affordable island in the Bahamas, this 6 acre undeveloped private island lies in the heart of the Middle Bight of Andros, a world famous bone fishing destination. It is located in the epicenter of the fishing flats with over 2,000 feet of shoreline to cast from, including 1,000 ft of sandy beach. A short boat ride will get you to either side of Andros which offers unlimited options for snorkeling, deep sea fishing, scuba diving, hunting and exploring blue holes.




If you would like more information about private island ownership or islands available for sale in The Bahamas, please feel free to contact us via the little envelope at the top of the page, or visit www.exclusivebuyerbahamas.com

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