Private islands a top target for investors

Billions of euros expected to be spent over the next few years in building resorts or sanctuaries for tycoons

Patroklos, a 4-square-kilometer islet off the coast of Attica, in the Saronic Gulf, is considered prime real estate by prospective investors. The son of former Israeli prime minister Ariel Sharon was involved in a controversial bid.

The purchase of one of the 60 private islands in Greece has become a particularly attractive proposition for tycoons and business groups thanks to the high cash flows they have enjoyed in the last few years.

Shipowners, entrepreneurs and mainly funds from abroad, such as Cyprus or the Middle East where the rise of oil prices has allowed for a great flow of capital, are the primary so-called island-hunters, who want to turn them into a “private paradise” or to realize tourism-related or real estate developments. In their frequent visits to Greece, foreign entrepreneurs usually talk about their investment interest in real estate and tourism, something which remains a relatively untapped source in this country.

The owners of those islands have by now realized the value of their assets and are rushing to make the most of them in the best possible way. One of the moves recorded a few months ago was the acquisition of Skyropoula, an islet of 4 square kilometers next to Skyros in the northern Aegean.

Sources suggest that the island was sold for 6 million euros by the Antoniadis family to one or more members of the Cypriot Haji-Ioannou shipping family, whose best-known member is Sir Stelios, the founder of easyGroup, which includes easyJet and easyCruise. Another recent purchase was that of the islet Kythro, near Lefkada. It is reported that Kythro, which measures 0.8 square kilometers, has cost an unnamed Greek investor some 2.5 million.

These are cases of private investments which will only be used by the islands’ new owners. Yet the island market has a far greater appeal if it involves the islands being developed for tourism with the construction of holiday housing complexes.

Such is the case of the 0.5-square kilometer island of Alatas in the Pagasitikos Gulf, near Volos. Reports suggest that the island has been leased for the next 50 years by United Five Development of Cyprus, which is expected to invest more than 50 million. These funds concern the construction of major hotel units of 900 beds, complete with restaurants, recreation facilities, tennis courts and swimming pools.

There are similar plans for Arkoudi island, in the Ionian north of Cephalonia. A  100 million investment that will create 300 jobs is in the works. The project will cover 4 square kilometers comprising 140 super-luxury accommodation units, a marina, a spa center and an 18-hole golf course as well as many other sports facilities. Entrepreneur Giorgos Stavropoulos is in charge of this tourism investment. This is one of the most important developing projects in Greece, as it will create an all-new destination for tourism.

Another island sold is Drymos, acquired by a group of British investors involved in property development. The purchase of the Cycladic island, which measures 3 square kilometers, is estimated to have cost 4.2 million.

Yet the island which generates perhaps the greatest investment interest is Patroklos, off the Attica coast in the Saronic Gulf. The position of the island, owned by the Giatrakos family of lawyers, and its size of 4.2 square kilometers, have attracted investors’ attention as it has the potential to be turned into a fine tourism resort. Israelis, including the son of former prime minister Ariel Sharon, had been involved in its possible purchase, although the deal has now definitely been abandoned and interest is turning to a foreign tourism group.

Experts believe the price tag on the island is expected to exceed 100 million, as its distance of just 850 meters from the Attica coast renders it a highly attractive destination and appropriate for developing a luxurious holiday resort as well as a marina.

Real estate experts argue that the price of every island depends on a variety of factors. The closer it is to the mainland, the more its price rises, as access to it becomes easier. No private island has infrastructure such as public utility connections, power, water, telephone, making it more important for an island to be near the mainland.

Other important factors include whether an island has underground water reserves to be drilled, beach potential or any natural harbors that can be approached by vessels.

But the main factor is whether an island has the essential documents so as to be transferred. These documents need a lot of time and maneuvering through the ministries of National Defense, Environment and Culture before they are issued. Every island sale requires an opinion by the Archaeological Service confirming the non-existence of antiquities and by the Forest Service about the non-registering of the island as forestland. It also requires a certificate from the National Defense and the Merchant Marine ministries, via the Greek navy, attesting that the island in question is not under any national security restrictions.

Consequently there are difficulties in the transferring of private islands near Turkey, as well as the Echinades islands in the Ionian Sea, since the latter area has entered the Natura 2000, a European Union program, according to which certain areas are protected and no access to them is allowed. All those documents may well require up to 12 months before they are issued.

More confusing is the inclusion of all Greek islands in the border regions. This means that the state maintains its right to repurchase each island if it so wishes and if the private status of the island is clear. If an island changes hands, the state can still repossess it from its next owner within one year.

Most of the owners of islands who have now put them on sale have inherited them from their ancestors, who in turn acquired them straight after the Turkish occupation, in the 19th century. As a result, many owners have had to take matters to the Supreme Court in order to claim them. Most of the owners have been granted a decision which gave them the title deeds. In any case, anyone interested in buying an island must be extremely careful with the title deeds and the accompanying documents. Most islands for sale have the full set of required documents.

Over the years, several Greeks bought an island mostly for their own private use, such as well-known Skorpios, which measures 0.8 square kilometers, bought by Aristotle Onassis. Today Skorpios has been completely abandoned, with some rumors circulating about its upcoming sale by Athina Onassis, the tycoon’s granddaughter, although this has been officially denied.

The shipping magnate Stavros Niarchos, Onassis’s biggest rival, also acquired Spetsopoula, southeast of Spetses, in order to host to his important guests. Revmatonissi, off the island of Paros, was purchased by Dolly Goulandris, while shipowner Panayiotis Tsakos bought Atokos island in the Ionian.

Cypriot group ready to invest 2 billion euros on the island of Dokos > One of the recent efforts to purchase a Greek island came from Cypriot group Kerlengou Island Investments Plan Ltd. It concerns the uninhabited island of Dokos, which measures 12 square kilometers and is located between Hydra and Spetses, just off the eastern coast of the Peloponnese.

Reports from Cyprus suggest that Costas Kerlengos acquired the island on November 17, following a private auction by the Livanos family, the island’s previous owner. Dokos cost its new owners 180 million.

Kerlengos’s aim is to turn the island into a holiday destination by developing hotel units, housing complexes in the form of villages, as well as isolated luxury houses, investing a total of 2 billion. He also intends to sell up to 12,000 plots of land, starting at 75,000 each.

The first studies regarding the future development of the island have already started. Due to the existence of many antiquities, the Kerlengos group can only use 7 square kilometers of Dokos, as the rest must remain undeveloped. Kerlengos stated that interest has already come from parties in Greece, Cyprus and the Middle East, and that he has lined up a Greek architectural firm to assist with the development. Construction is due to begin in early 2008.