Islands in the sun: from Oman to Kuwait, "Island Mania" is driving local real estate markets, as countries vie to build ever more spectacular man-made environments. But the true price may be far higher than builders imagine.

Author:Martin, Josh
Position:BUSINESS & FINANCE
 
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UNLIKE EARLIER, utilitarian manmade offshore port facilities like Iran's Kharg Island, these newest bits of land are designed for lives of purest luxury. They come with evocative names like The Palm and The Pearl--both named according to the shape of the manmade archipelagos.

The scale of construction is awesome. The first stage of The Pearl involved moving 1.65bn cubic metres of sand and 87m tonnes of rock.

One project boasts 250 private islands, clustered to resemble the continents, bearing the appropriate name: The World.

The creation of so many islands allows most property to carry prestigious "beachfront" status. "It is a compact way of doing it," says Raouf S. Ghali, president of Hill International, an international project management and construction consultancy. "It maximises the amount of beach-front property you can realise in such a project."

Such clusters of manmade islands, like the walled residential communities of America, represent a trend in modern real estate: tightly controlled luxurious environments where the very rich can cavort in relative freedom. Saudi princes and Indian movie stars have snapped up choice sites. Western buyers are already said to include British football star David Beckham and the self-exiled American pop star Michael Jackson.

Condo prices now start at $2m, and hotel rooms are slated to be priced at over $2,000 per night.

Buyers are given a wide range of options, including 7-star hotels, condominiums, villas and townhouses, with matching facilities designed to cater to a well-heeled clientele. Amenities include marinas and heliports, as well as exclusive shopping and spa facilities.

None of this comes cheap: Qatar's island project, The Pearl, carries a construction price tag of $2bn. Bahrain has two projects--the Seahorse and the Two Seas--which are expected to cost over $3bn. But Dubai dwarfs those efforts, boasting four manmade archipelagos under development, carrying a combined price tag estimated between $14 and $20bn.

Some critics argue that this is a waste of capital, which could be better invested in long-term development.

Fariborz Ghadar, director of the Centre for Global Business Studies at America's Penn State University, points out that the issue isn't whether the islands are manmade, but what role they play. "The islands built or developed in Iran are essentially economic entities," he says. "The ones being built on the southern side of the Gulf are being primarily built for tourists, as...

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