There are many reasons the island market is sinking. The global economy is weak, even for the super rich. Many of the newly wealthy snapped up islands as the ultimate status symbol before the recession hit, when high-profile island-owners like Richard Branson, Johnny Depp and Celine Dion made owning an island glamorous.
But the reality of owning a private island has turned out to be less charming than many buyers expected. Building a house or buildings on a private island requires costly permits that can take months, even years. Local governments in the far corners of the world are often rife with red tape and corruption.
The logistics of getting to an island, by plane, then boat or a connection to a smaller plane, turns out to be a hassle for the time-pressed wealthy. And some families rarely visited their island because of the demands of their businesses or families.
Craig McCaw, the telecom tycoon, bought the 780-acre James Island off the coast of Vancouver in 2006 for $26 million. It’s got an 18-hole Jack Nicklaus Signature golf course, a 5,000-square foot house, six guest cottages, an airstrip and fake “western village.”
McCaw told the Wall Street Journal that while he “adores" the island he doesn’t visit often enough. He said his school-age kids have so many activities at their home in California and “no one wants to be left behind." He is now selling James Island for $75 million.
Mark Lester, the marketer for James Island and the senior vice-president of the Specialized Assets Group of Sotheby’s International Canada, said he has seen strong interest in the island – especially from prospective Asian buyers. He said some of the interest from local buyers is from consortiums – a group of 10 people, for instance, who want to split the cost and upkeep.
The island can be divided into 80 lots, but Lester says the ideal size would be 10 lots, “so you preserve the privacy and use that the land affords now.”
He said he is careful to screen prospective buyers for their ability to do a deal, since showing an island can be time consuming and expensive. “I want to make sure I’m not just taking someone out for a picnic and day on the island,” he said. “We’re very rigorous about pre-qualifying people.”
Greece epitomizes the current state of the private-island market. The country's economic troubles have led to many great bargains on some of the most beautiful islands in the world, but Chris Krolow of Private Islands Inc., who has several new listings in Greece, has not closed any deals since there is so much red tape and uncertainty in Greece.
For the right person, though, one of Krolow's latest offerings could be a steal. He's showing a chain of five islands selling as a group for 4.9 million euros.
“You could buy all five islands,” says Krolow. “So when you’re at a party with other rich guys and they ask, ‘How big is your island?' You could say, ‘Well, I have my own archipelago.’ That’s when you’re really rich, when you have your own archipelago."
-By CNBC's Robert Frank
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