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Bermuda number one for UHNWI real estate investment, says report

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Bermuda has claimed the number one spot in a new list of the world’s top 20 islands for UHNWI real estate investment published in The Candy GPS Report.

The report – produced by Candy & Candy, Savills World Research and Deutsche Asset & Wealth Management – analysed the global island real estate market based on volume of UNHWI property holdings, transport links to mainland markets, sources of capital and occupiers, tax regime and real estate prices.
 
“A private island is the ultimate trophy asset,” says Nicholas Candy, CEO, Candy & Candy. “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.”
 
With the price of a typical four bedroom property in Bermuda now exceeding USD4 million, this sought-after Atlantic region has the highest concentration of UNHWI property holdings of any island outside the US.
 
The 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 US, the appealing climate and favourable business environment. Europe’s safe haven, The Channel Islands, also features in the top five where property prices have remained resilient during the global economic crisis.
 
“The last 10 years were the decade of prime urban property investment; the next 10 years will see a growing appetite for island real estate investment and lifestyle,” says Yolande Barnes, director, Savills World Research. “For the world’s wealthy, the pinnacle of achievement is to own what is exclusive and rare, so an island property goes hand-in-hand with a luxury apartment in a prime city.”
 
Staying in the sun, North American islands including the Hawaiian islands, the Florida Keys, Nantucket and Martha’s Vineyard also feature heavily in the top 20 where the second home market is buoyant and prices have exceeded USD2 million for a four bedroom property.
 
The report identifies four distinct island real estate markets; private islands – the ultimate trophy asset, leisure islands – for second, third or fourth homes, relocation islands – for a permanent lifestyle or business move, and city-linked islands – for island life but with city convenience.
 
“When it comes to owning island real estate, there are many motivations driving these purchases,” says Barnes. “A purchase of passion or for social cachet, a business or relocation move, or a philanthropic desire. Islands can be safe havens during global economic unrest and premier city-linked island real estate can cost up to four times that on the mainland.”
 
As small segment of the real estate market, private islands represent the ultimate trophy asset, behaving more like fine art or precious jewellery, operating quite independently of the wider property world.
 
“There are three main categories of buyer in today’s market,” says Salman Madhi, head of key clients relationship management, Deutsche Asset & Wealth Management. “Developers looking for opportunities to create luxury resorts, wealthy conservationists working in tandem with governments to preserve wildlife havens and high-net-worth individuals who consider the urban playground to have become too accessible and lost its glamour.”
 
The report also identifies a number of factors that are changing the shape of island real estate markets including increasing global wealth, new transport infrastructure and philanthropy and conservation.
 
“The global UHNW population is forecast to grow by 22 per cent by 2018 which will fuel demand for alternative real estate, particularly with a boost from Asia, the region where it is set to grow fastest,” says Barnes. “The lower end of the luxury island market is also set to explode as young money buys into ultra prime property and resorts on the world’s most sociable islands. This spurt of activity will also drive demand at the top end of the market. The uber wealthy, in search of the ultimate adventure, will seek out the rarest opportunity, paying a premium for scarcity.” 

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