The dreams and nightmares of owning a private island (© Private Islands Online)Click to enlarge picture

Little Hog Cay, a 25-acre island in the northern Bahamas, can be yours for $1.95 million. // © Private Islands Online

From the rocky shores of Maine to the beaches of California, residential home prices have fallen hard during the Great Recession. Commercial property values have followed. New home construction has all but collapsed.

As goes the mainland, so goes the market in private island real estate? Not exactly. Prices for developed island properties near populated areas have dropped, reflecting a shrinking market in second homes overall, real-estate agents say. But sales of remote and high-end private islands in exotic locales have held fairly steady throughout the downturn, says international island real-estate agent Farhad Vladi, as governments, nonprofits and nature conservatories have moved in to buy always-limited inventory in the absence of private buyers seeking their ultimate fantasy getaway.

"Islands are like diamonds," says Chris Krolow, CEO of Private Islands Inc. "Beauty is essential, but rarity makes any commodity infinitely more desirable."

No clear-eyed investor should ever mistake owning an island as a haven for money. "I wouldn't describe it as an investment, really," cautions Mark Goldman, professor of real-estate finance at San Diego State University. "It's more a consumption item," like buying a yacht. "And, boy, it's got to be one of the ultimate status symbols. You get privacy, status, your own domain, a kingdom where to a great extent you can create your own rules."

Slide show:  Private islands for sale

Mind you, there are inconveniences galore with owning an island: getting there, for one. Dangerous weather that can wreak havoc on buildings and power and water supply, for another. Many undeveloped islands don't have the permits to become developed, and the red tape can slowly strangle the Robinson Crusoe fantasies out of even the most romantic of buyers.

But, as Krolow says, island owners are a fiercely independent, entrepreneurial lot for whom the cachet of private island ownership outweighs the cost. Who in the summer hasn't gazed across the water to a secluded island with a boat moored to a private dock and wondered what it would be like?

Slide show:  Private islands for the rest of us

As Krolow puts it, "It's the rare opportunity to create your own reality and, at least temporarily, live your life exactly as you choose."

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