Private ownership of islands in the Mediterranean
Dr Farhad Vladi looks at today’s private island market in the Mediterranean and its future prospects

Few people can resist the idea of owning a private island, far from the stresses of the modern world.
An island feels infinite and the surrounding water creates a natural boundary that gives an impression of freedom and security that isn’t found anywhere on the mainland.
During three decades in the island business, I have had the opportunity of meeting island owners with the most varying personalities. But, irrespective of their backgrounds or achievements, they are all individuals who love nature and are determined to find it. For them, an island is the one place that catches the spirit of solitude, tranquillity and privacy that they seek. The Greek shipping magnate, Aristotle Onassis, was not the first person to own an island hideaway (Skorpios, a gem in the Ionian Sea), but he was the first to instil into public consciousness the concept of the private island as the ultimate retreat. Other well-known island owners have included Marlon Brando, Malcolm Forbes,
Charles Heidsieck, Rudolf Nureyev, Baron Rothschild, the Shah of Iran and John Wayne. Today’s high profile island owners include Bjorn Borg, Richard Branson, Nicolas Cage, Tony Curtis, Diana Ross, Brooke Shields and Ted Turner.

The practicalities
While an island is just a piece of real estate surrounded by water, there are huge differences in terms of practicalities and use. Some infrastructure difficulties have been overcome in recent years, with the development of electricity generating systems, water purification, comfortable prefabricated houses, new road building techniques and satellite communications. While people have different views on such things as good access and climate, one factor which is of vital importance to everyone is the availability of emergency medical services, which must be no more than 90 minutes from an island by boat, plane or helicopter. Islands are usually private resorts for holidays.
Normally people buy a holiday home where they are familiar with the social and natural environment, but these parameters can be very different on an island.
I would strongly recommend that anyone seeking to buy a private island first rents one, either the one he is looking to purchase or one nearby.
Buying an island is about making compromises, as the perfect island for everyone doesn’t exist.

Buying an island
The following checklist of twelve vital criteria is designed to help buyers evaluate a private island and decide which points they are willing to compromise on.
All criteria are usually negotiable, with the exception of the availability of medical services nearby, which is essential!
When rating islands, we assign each of the following twelve checkpoints a score of two points, making a maximum of 24 points. If an island scores 16 points, then we consider it to be habitable.

1. Access Is the island accessible? For example, harbour, anchorage and/or landing.
2. Building Permit What is the availability of building permits, the size of house and type of development that is permitted?
3. Climate Thoroughly investigate the weather and climatic conditions, and whether they appeal to you.
4. Fauna Can you live with (or eradicate) the indigenous wildlife on the island, e.g. mosquitoes, etc?
5. Flora Make a note of the island’s trees, shrubs and plants, and their pros and cons.
6. Host Country What is the social environment and acceptance of foreign ownership of the island?
7. Infrastructure Does the island have water, sewage, electricity, telephone and internet services (or can they be provided)?
8. Medical Emergency medical services must be available by boat or air within 90 minutes of an island.
9. Seller Will you be dealing with the owner directly, a licensed agent or a third party?
10. Surroundings What is the immediate neighbourhood like – amenities, services and crime level?
11. The Title Must be freehold and unencumbered.
12. Value (Investment) Is the market locally-driven and/or driven by foreign investors?

The island market
As with all commodities, supply and demand determine the price for private islands, but there is one aspect which is different from other property purchases, which is the intangible value. An island can have a beauty or an emotional ‘value’ which often reminds me of the art market, where paintings can also be emotional assets: it is not the quantity of paint or size of canvas that determines the price of a painting.
Apart from the intangible value, the market for islands is also driven by the availability of surplus cash.
When the stock market is strong, the island market also flourishes. When people have surplus cash, the decision making process speeds up: instant decisions can be made with instantly available cash, and vendors are persuaded to sell by rising prices. However, when there is a stock market crash or a recession, prices in the island market can fall sharply, as it is easier to sell a holiday home than a house in which your family is living (few people live permanently on an island).
Until recently, islands have been cheaper than mainland properties, due to the infrastructure disadvantage. That disadvantage has been eroded by innovations such as satellite communications, water makers and desalination plants; solar and renewable energies; and wind generators – and island prices have balanced out with those for mainland properties. More recently we have seen island prices outstrip those of mainland properties, especially in places such as the Mediterranean, where islands are unique, there are no infrastructure disadvantages and a high emotional value is placed on an island’s beauty. On the other hand, in countries where islands are plentiful, such as Sweden, Norway, Finland and Canada, the market is more stable - and it is said ‘if you can afford a car, you can afford an island’.

Islands in the Mediterranean
The hot spots in the Mediterranean are Spain, France and Italy. Few if any islands are available and they go for almost any price. There are always more buyers than sellers and when owners decide to sell they can, in many cases, simply ask any price they want.
There is a ceiling, however, which is the price of a comparable nearby island or islands in other areas.
In the final analysis, a Japanese investor, for example, is not too concerned whether an island is in Spain or France, or on the other side of the Atlantic in the Bahamas or Florida. Therefore if a Spanish island is too expensive, the Japanese investor will go for an island in Florida. It must be borne in mind that the European continent has many wealthy people and their demands determine the market.
The only counter force in Europe is the nature conservancy laws. In France, even if you have an island with no building, you are not allowed to build one.
If there is a building on a Spanish island, the owner might get a permit to renovate it, but not to enlarge it.
Therefore there are limits. The island market in Greece is completely different and, since Onassis and Stavros Niarchos bought their islands, island owners have believed that any island is worth millions of Euros, irrespective of its size. For decades, unrealistic prices have been asked, but there has been very little movement, what with the difficulty of obtaining building permits, drought and infrastructure disadvantages.
I have seldom seen or heard of realistic prices in Greece, but I hope this will change in the future. Other areas in the Mediterranean, such as Croatia and the African coast, are emerging markets. The African coast does not have too many islands, while Croatia has many beautiful ones, but it may be a little premature to talk about them. Currently, the title system is in need of a complete overhaul and professionals are biding their time, despite the fact that some islands have been sold for substantial prices.
The Adriatic will, in my opinion, be the focal point of island buyers in the future.

Dr Farhad Vladi is President of Vladi Private Islands in Hamburg, which he founded in 1975 and is the author of Luxury Private Islands (teNeues 2006).