The assessed value of James Island has dropped for the second year in a row, but does that mean it’s a good time to buy a private island?
Not necessarily, experts say. Private islands might be the stuff of dreams, but they’re tough to put a price on, and timing the market to land a good deal can be tricky.
The 770-acre James Island, which for years has been the capital region’s most valuable residential property, dropped in value to $57.526 million on this year’s B.C. Assessment list, down from last year’s $57.93 million, and 2023’s valuation of $61.24 million.
While other private islands in the region also saw their values drop — Fane Island was assessed at $822,000 this year, down from $830,000 last year, and Julia Island was valued at $1.745 million, down from $1.769 million last year — others held steady or saw small increases. Norway Island was valued at $5.749 million, up from $5.745 million last year.
Private island expert Mark Lester, senior vice-president with Unique Properties, a division of Colliers Canada, said it’s tough to pin down what’s happening in the market, as it seems to have been stagnant over the last two years, following a rash of activity during the pandemic.
“During COVID, pretty much everything sold, not just private islands,” he said. “We had super-low interest rates, we had a desire for people to get away to some more remote locations, and people recognized that it was easier to work remotely.”
The result was people relocating to places they really wanted to be, like smaller, more remote towns, or in some cases, to private islands.
“It created this super-heated market,” Lester said. That tailed off sharply, however, when interest rates started to rise significantly in the fall of 2022, affecting confidence in the market.
While those who dabble in buying private islands tend not to rely on financing and are not typically interest-rate sensitive, it may have been enough to cool things off, he said.
He said there has not been much activity over the last two years, as islands tend to be discretionary purchases — “Nobody needs an island” — which may be part of the reason James Island has seen its assessed value drop.
Ty Whittaker, executive vice-president with Colliers Victoria, said it’s likely the poor economic situation and higher costs of debt are dampening enthusiasm for these kinds of investments. “When times are good, there are purchasers for such assets and when things tighten up as they have, secondary homes get hit first with a decline in value.”
Even coming up with a price for an island can be tricky, especially in a market where very little is moving.
Matt Butterfield, B.C. Assessment’s deputy assessor for Vancouver Island, said sales are definitely a key factor in putting a price on a piece of land.
“We’ll also look at what is the broader market for someone looking to purchase a private island versus purchasing a luxury property,” he said.
Other considerations include the highest and best use of a property, access to water and power, how remote it is and how people can get there.
“When we do our review on those types of complex properties, we’re taking multiple variables into account,” he said.
Lester said factors to take into consideration when making an appraisal include accessibility, topography and development potential.
For those with the financial means, there are many reasons to invest in a private island, he said. “People want an island because it’s sort of your own private kingdom, it gives you all of those unique attributes — your own moat around your own kingdom and they’re excellent long-term investments. They always increase in value because there’s a limited supply of them.”
Lester estimated about half a dozen islands are listed for sale in the region and a few more that are considered “softly available” for the right offer.
Unique Properties has four islands listed for sale, including 29-acre Norway Island, which just had its price reduced to $5.75 million.
An online marketplace called Privateislandsonline.com lists 11 islands in B.C. for sale, ranging from $699,000 for Clayoquot Island, a 0.28-acre island near Ucluelet with no buildings, to $11.3 million for 65-acre Breakwater Island near Gabriola, which features land that can be developed.
Lester said one reason sales activity in the private-island marketplace is limited is that islands tend to be held for generations, and families have emotional attachments to them.
They can also be a tough investment to have, since they require a very specific buyer, which makes them difficult to sell in a hurry.
“They tend to be illiquid assets at the best of times,” he said.
Lester said the list of potential buyers is limited to those with the financial means, who can operate a boat and maintain a property, or who can afford to hire someone to do that for them.
“You eliminate a bunch of people who would otherwise like to drive up to their waterfront estate on the Saanich Peninsula,” he said.
But Lester maintains the unique attributes of privacy, some freedom and “that unique experience of being on that private island” outweigh the challenges for many people.
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