The Philippine branch of property portal Lamudi made headlines with a surprise deal last week with an unnamed buyer (reportedly from the US) shelling out more than $2bn for a 25-year lease of the 10,000-hectare Fuga Island in Cagayan province in the northern Philippines together with its 1,786 inhabitants: an equivalent of $80mn a year.
By Arno Maierbrugger/Gulf Times Correspondent/Bangkok
Anyone who wants to join celebrities such as Johnny Depp, Mel Gibson, Leonardo DiCaprio or Richard Branson – just to name a few - in owning a private tropical island doesn’t need to look farer than the Philippines. The archipelago with its roughly 7,100 islands has embarked on the lucrative business of selling or long-term-leasing private islands, and business is apparently thriving with some good bargains to be had.
Since the advent of online property portals that specialise on the sale or lease of private islands, buyers have been spoilt by choice. Marketplaces such as Private Islands Online are offering a broad range of Philippine islands – developed or undeveloped, inhabited or uninhabited – for prices between $800,000 and $72mn, depending on size and whether it’s a freehold or leasehold property.
The Philippine branch of property portal Lamudi is also experiencing an increasing number of postings that offer islands for sale and let, and it made headlines with a surprise deal last week when news broke that an unnamed buyer (reportedly from the US) shelled out more than $2bn for a 25-year lease of the 10,000-hectare Fuga Island in Cagayan province the northern Philippines together with its 1,786 inhabitants - an equivalent of $80mn a year. This was so far the highest price fetched in a private island deal in the country.
Someone who leases a private island for $2bn must be incredibly wealthy – or he or she must have a business strategy. Private islands in Southeast Asia – where they are available – have already become very costly due to high demand by hotel developers. Thus, if someone expects the freshly purchased island to become part of a tourism development later, profits are on the horizon.
Whether for private use or as an investment, islands have become the new property business niche, according to Jacqueline van den Ende, Lamudi’s Philippine country manager. “Demand, especially from foreign clients, is spilling over to private islands and isles,” she said.
However, buying a private island can be tricky, particularly in the Philippines where ownership rights on the land are sometimes not clear, and building or development permits can be hard to get by due to environmental regulations as many islands are located in protected areas.
First on the checklist for a private island buyer should be the question what kind of title he or she is acquiring: Is it freehold or leasehold? Both are available in the Philippines, but freehold is a better choice as it normally grants unlimited ownership and a sale at a later point of time can fetch a considerably higher price. Other important points are accessibility and infrastructure, including drinking water, power and telecommunication, as well as proximity of medical services.
Running costs of owning an island should also not be underestimated. Apart from taxes and annual fees, an island needs to be maintained and managed by a professional property service firm as the owner will normally not be present there all year long. This should all be taken into account before anyone makes an impulse purchase decision and buys an island on the web.
