The Allure of Owning an Australian Island

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There are few status symbols that hold up to owning an island, and for those looking to take the plunge, the stunning coastline of Australia has a range of sublime islands for sale.

Relatively inexpensive to purchase when compared with prime city property—but exorbitant to develop and maintain—they give the owner complete control over a domain, and a front-row seat to wild, remote vistas of natural beauty.

Some might look to the Caribbean, where Richard Branson, Johnny Depp and Leonardo DiCaprio are among an elite group of island-owners. But Australia’s vast coastline also boasts myriad postcard-perfect islands, and at any given time there are some for sale, ranging from less than A$1 million (US$680,000) to tens of millions of dollars.

They’re more of a lifestyle choice than a savvy investment decision, as the buyer pool is thin and the maintenance costs tend to be high. But those with luxurious facilities built on them occasionally sell for large sums, and some large islands with commercial zoning have lucrative tourist resorts.

The Island Buyer

Richard Vanhoff, director of brokerage Private Islands Australia, has been selling islands with his wife Narelle since 2004. Most of them are on the tropical Queensland coast along the Great Barrier Reef—an area known for its warm climate, turquoise waters and abundant marine wildlife. Mr. Vanhoff said a range of motivations drive people to purchase islands, some of them on the quirky end of the personality spectrum.

One of his more recent buyers was a Sydney doctor and avid shell collector, who bought an island because of the plethora of shells that can be found on its shores. Other island dwellers simply aren’t very social and want to live away from society.

But most of the buyers are part-timers, sometimes buying as a group.

“There are the young characters getting together with their girlfriends and turning them into fishing spots for their mates,” Mr. Vanhoff said. “They formed a corporation and they’re out there partying every several weekends.”

Larger islands with commercial zoning—which allows the operation of a resort—often have an ownership history that reads like a Rich List of wealthy entrepreneurs. These buyers tend to have complementary business interests, but the line between personal and business use is blurred.

“They tend to be people who have had some industry related functions, such as building, construction, property development,” Mr. Vanhoff said.

The late winemaker and yachtsman Bob Oatley, for example, paid $200 million for Queensland’s Hamilton Island in 2003. His family developed it into one of Australia’s most desirable holiday destinations, with a highly popular yacht club. The roughly 2.7-square-mile island’s annual Race Week has since become Australia’s largest offshore keelboat regatta. It’s about 20 kilometers from the nearest harbour on the mainland, but most residents and holiday goers get there via a commercial airport on the island.

Hamilton Island’s previous owner, Queensland tourism entrepreneur Keith Williams, had, like Mr. Oatley, purchased the island after being struck by its beauty while sailing past it.

About 400 kilometers further north along the coast, Dunk Island is now under contract for around A$30 million to a first-time Australian investor, according to published reports. A resort on the island was once a playground for the likes of Sean Connery, Henry Ford II and several Australian prime ministers before it was devastated by Cyclone Yasi in 2011.

Its current owner Peter Bond, former CEO of failed energy company Linc Energy, bought the roughly two-square-mile island for around $7.5 million in 2012, and kept it for personal use, according to Tom Gibson, group vice president of Jones Lang LaSalle Hotels and Hospitality Group and the broker for Dunk Island.

A Tiny Slice of Paradise

But wisely, most island buyers with a personal retreat in mind opt for something smaller and easier to maintain.

In 2016, Mr. Vanhoff sold the 23-acre Turtle Island on the Queensland coast near Gladstone to a billionaire from overseas. He wouldn’t provide details, but media reports said it was Singaporean property magnate and hotelier Koh Wee Meng, who paid A$3.45 million and planned to use it as a personal retreat while in Australia.

At the time of sale, it had a four-bedroom house, pool, pontoon, two helicopter pads and parking for five cars (which would get to the island via a car barge), along with water tanks and dams. The seller was Australian actor Brendon Lunney, and the island was originally developed by horse racing identity Bob Bentley.

Mr. Vanhoff has a range of other islands for sale, including the rugged, undeveloped 40-acre Ninth Island about 12 kilometers from Tasmania’s north coast for A$1.98 million. And a month ago, he sold the 69-acre Worthington Island about 500 meters from the Queensland coast near Gladstone, for A$400,000, dubbing it “Australia’s cheapest island.”

But while the price tag is cheap compared to a lot of city homes, the expenses that come with island ownership more than make up for this.

The logistics of shipping materials and workers to the island make building and renovation far more expensive than owning property on the mainland. Some islands are connected to the mainland power grid but many are not, meaning they have to generate power, collect their own water and treat their own sewage.

Even when the local government doesn’t provide any utilities or services, owners still have to pay rates of A$1,000 to A$2,000 per year, Mr. Vanhoff said.

And while there are some freehold islands on Australia’s coasts, many are owned by state governments and sold on a leasehold basis, typically 99 years. Owners of leasehold properties don’t need to pay land tax, but they do pay annual rent, which can vary between A$3000 and A$20,000 depending on the island, Mr. Vanhoff said.

Making it Stack Up

For those who don’t want to grapple with the challenges of owning an entire island, there is the option of buying a home on luxurious Hamilton Island, where all the infrastructure has already been built, including a commercial airport. There are now more than 800 privately owned homes on the island ranging from A$300,000 to more than A$10 million.

The spectacular Hamilton Island home Solis, designed by architect Renato D’Ettorre, sold this year for an undisclosed price after being marketed for A$15 million. It has three bedrooms, three separate swimming pools and stunning views of the Coral Sea.

For those who choose to buy an entire island, all but the wealthiest owners offer some kind of public accommodation offering to either profit from their ownership or simply help meet the costs.

At Bedarra Island on the Queensland coast between Cairns and Townsville, owners Sam and Kerri-Ann Charlton run a highly rated, small resort with eight “barefoot luxury” villas that allow guests to take in the beauty and tranquility of the area.

The same is true for the owners of Picnic Island on Tasmania’s East Coast who rent out the whole island as a small eco-resort for up to 10 guests.

Mr. Gibson, of Jones Lang LaSalle Hotels and Hospitality Group, said demand is growing for what he dubs “experiential luxury”–minimalist, boutique resorts in beautiful, remote places.

And this demand has helped improve the market for island properties, Mr. Gibson said, by bringing a surge of tourism investment into the Great Barrier Reef area in particular.

Queensland islands copped a pounding when tropical cyclone Debbie swept across the region in 2017, wreaking havoc on the Whitsundays, in particular the Daydream, Lindeman, Hayman and South Molle islands. But all of these islands have either been re-opened or purchased by investors with development plans.

Dunk Island’s owner seized the opportunity to offer the island for sale, Mr. Gibson said.

“The market is doing well, and there are limited opportunities available,” Mr. Gibson said. “He saw it as a good opportunity to sell. The buyer has grand plans to reposition the old Dunk Island Resort operation and open it up again.”

And while foreigner buyers will need approval for some purchases from the Foreign Investment Review Board, Mr. Gibson said, “we never have an issue with it.”

“I wouldn’t even consider it a threat,” Mr. Gibson said. “Looking historically back to the ’80s and ’90s, islands along the Australian coast line have been equally shared between foreign and domestic ownership. To this day the percentage of ownership is about the same.”

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