Forget a house - buy an island

Owning an island is likely to be something that few people would ever seriously consider. While it is exciting to imagine what living on an island would be like - palm trees, sunsets, gentle breezes - most people could never afford to own a piece of paradise. Or could they?

With an increase in the number of island properties on the market today, coupled with the many motivated sellers (even island owners have to cover their losses from the stock market freefall), purchasing this exclusive property type may be more affordable than many of us think. For those looking for a different lifestyle and a little adventure, maybe it’s time to forget a house - and buy an island.

How to shop for an island

The internet is a convenient place to look for island properties. Websites such as www.privateislandsonline.com maintain current real estate listings of islands that are searchable by location, price and type. The type of island is an important factor, since it will determine if the island is virgin (with no development), what type of access it has (bridge, landing strip or boat only) or if any improvements have been made. It is also critical to determine what type of development, if any, will be permitted on the island.

Because of differing laws between countries regarding ownership and type of leasehold, it will be especially important to perform due diligence when considering an island purchase - with the assistance of a qualified lawyer.

Island shopping is not as convenient as driving around a neighbourhood with a real estate agent; it pays to thoroughly research and ask all the questions you can think of prior to making the trip to check out the property.

Location, location, location

Where an island is located has a significant effect on its value. Islands that are private, yet still close to civilisation and amenities like shopping, airports and hospitals, are more convenient, and therefore, tend to be more expensive.

A beautiful island in the middle of the ocean, far from any facilities and services, will probably be less expensive. People do put a price on convenience, and while island dwellers typically enjoy the privacy and remoteness that an island offers, they also want to be able to buy food and go to the doctor if necessary.

An island’s climate is an important consideration when looking for real estate, and it is a factor in the property’s value. Islands located in more desirable climactic regions, such as the tropics, may be more expensive to purchase and are generally more costly to maintain due to excessive heat, rainfall and the potential for damaging storms.

While many of us visualise palm trees and white sandy beaches when we think of an island paradise, it should be noted that many of the properties are located on lakes – rather than the ocean. Again, depending on location, these lake islands can be quite exclusive and expensive, or lesser known and more affordable.

Challenges of development

Islands that have no improvements will require additional time and money before they become habitable. Finding well water, generating power, creating telephone access and building roads will have to be addressed. So will finding the manpower to undertake all of these projects.

Local contractors can assist with determining the feasibility of these projects, and they can provide a time/cost estimate for the work. Generally, the more remote an island, the more creative the process will be in terms of both infrastructure development and home building.

Islands on the market

A quick look at one of the island property websites reveals that a buyer could spend as little as AU$33,000 or as much as several hundred million dollars. Usually the properties with immense price tags are for island resorts - places that will be used as a commercial investment rather than as a personal getaway. The smaller islands intended for personal use, however, are often priced similarly to inland properties in desirable locations.

Hog Island, for example, is a 20-acre undeveloped island in Nova Scotia that is on the market for $183,000 - not the millions of dollars many would expect for a sizable island. The most lavish properties are multi-thousand acre paradises slated for golf courses, exotic spas and upscale vacation resorts.

Come sail away

While most of us would assume island ownership to be something completely unattainable, a little research reveals that it may not be as impossible as we think.

Inland property values often exceed $11,000-$22,000 per acre, and many of the islands are priced well below that. Certainly, additional costs must be anticipated for infrastructure and building development, but even when all expenses are accounted for, an island nirvana might be more realistic than we imagine.

If you have ever thought about island life, it might be worth your while to at least take a look at what is available. You might decide to forget a house, and buy an island.

HDB quarterly resale prices hit new record but analysts say prices stabilising

SINGAPORE: HDB resale prices have hit a fresh record in the first quarter of this year rising by 2.8 per cent compared with the previous quarter. But the latest figures show signs of a market that’s finally stabilising after months of runaway prices.

Some analysts expect demand to continue to rise in the next few months but said cash premiums are unlikely to go much higher than the current median of S$25,000.

The official figures confirm estimates released earlier this month.

Resale transactions have dipped by about five per cent while median cash premiums, or COVs, have risen at a much slower pace than in previous quarters.

They went up S$1,000 in the last three months compared to the jump of S$12,000 between the third and fourth quarters last year.

They now stand at S$25,000, with flats in Bishan fetching the highest COVs, of about S$32,000.

Strong demand for newer estates has also translated into high premiums.

Towns like Punggol and Sengkang are seeing premiums of about S$30,000.

Eugene Lim, associate director, ERA Asia Pacific, said: “If you compare Punggol, Sengkang prices vis—a—vis mature HDB estates, they are still cheaper. Even though with high COVs of around S$30,000, you find that S$30,000 actually is the average COV nowadays for most flats. So, if you’re paying thereabouts, why not get something newer versus something older?

Analysts said measures to cool the market have worked including the launch of more HDB projects.

Other measures include restricting the cash portion of the second concessionary home loan, channeling the loan through the buyer’s CPF account.

Moving forward, ERA’a Eugene Lim said the government may consider further measures to ease demand.

And while some observers say possible interest rate increases later this year will hit buyers’ pockets, others disagree.

Jeffrey Hong, executive director, HSR International Realtors, said: In general they don’t look at, At the end of 30 years of loan, how much do I actually pay for my flat? The first—time buyers are more concerned about how much they pay on a monthly basis. So if the increase in the interest is not much, the increment of the monthly payment is probably S$20 to S$50 a month more.”

In the rental market, demand between January and March increased sharply, with transactions up 69 per cent over the previous quarter.

The HDB said subletting transactions went up from 3,902 in the last three months of 2009, to 6,606 cases.

Analysts said this is partly driven by foreigners returning to Singapore to work as the economy improves.

However, rents remain relatively stable, with median prices for four— and five—room flats hovering just under S$2,000 a month.

Analysts said this is partly driven by foreigners returning to Singapore to work as the economy improves while the HDB said the spike is also due to an increase in renewals of rental flats.

In the last three months, 2,323 flatowners applied to continue renting their flats, 19 per cent more than the previous quarter.

The HDB added that more homeowners are also aware that they have to apply to the HDB for approval which could add to the increase.

However, rents remain relatively stable with median prices for four— and five—room flats hovering just under S$2,000 a month.

ERA’s Eugene Lim said strong demand will not likely translate into escalating rents because the supply of flats that can be subletted is high.

Under HDB rules, flats can be sublet after a minimum of three years.

But analysts said there is no similar jump in demand in the private rental market, suggesting that rental budgets remain low.

In the private residential market, prices were up 5.6 per cent, marginally higher than the 5.1 percent hike initially estimated.