Zhejiang province in East China has more than 2,800 islands with an area of between 500 square meters and 1,000 sq m. Shen Yanzhang / for China Daily

Province charts plans to lease coastal islands for private investments

The rich always find new ways that set them apart from the rest of the pack. Be it designer watches, clothing, automobiles to exclusive clubs, resorts and Gulfstream jets, they leave no stone unturned to guard their exclusivity. The next big thing on this exclusive list is to own your own island.

Having your own island is not all about having an expensive toy, but also more of a sensible investment opportunity for savvy entrepreneurs.

While the concept is not exactly new, what has spurred the resurgent interest in islands is the recent opening up of many locations for private investment and the latent tourism boom in several nations.

In December 2004, Hollywood star Mel Gibson purchased Mago Island in Fiji from Tokyu Corporation of Japan for $15 million (10.98 million euros). Leonardo DiCaprio purchased a sprawling 104-acre (42 hectare), 202-mile (328-kilometer) long Belizean island in 2005 for $1.75 million. Nicholas Cage owns a 40-acre island in the Bahamas, while illusionist David Copperfield owns not one but several private islands called Musha Cay in the southern Bahamas.

With the number of rich people growing in China, there has also been an interest in island investments.

The idyllic tourist islands of East China's Zhejiang province have long been the favorite vacation spots for residents from nearby regions. But if the local government has its way, soon you can lease the islands for a minimum period of 30 years. The local government is also offering sweeteners like simplified procedures and removal of red tape to facilitate investment.

The local government will soon release a list of unoccupied islands off the coast of Zhejiang that are available for investment. Foreigners and overseas companies will face no legal barriers in using these unoccupied islands - most of which are the size of a soccer field, say local officials.

The first batch of islands to be leased will include 30 inhabited islands in the coastal areas near Ningbo, Wenzhou, Zhoushan and Taizhou, an official with the Zhejiang provincial ocean and fisheries bureau says on condition of anonymity.

"Being the first batch means they are located relatively close to the mainland and are more suitable for reclamation," she says. She also mentioned the plan is to rent these islands out for tourism, commercial fishing or industrial use.

According to figures revealed by bureau, the number of islands with an area that measures from 500 square meters to 1,000 sq m in Zhejiang is around 2,878. Nearly 90 percent of these islands are uninhabited.

Wenzhou businessman Huang Xiangxun, who's also the president of the Shanghai-based Haobo Chair, is one of the investors keen on such investments. "I'm thinking of leasing an island near Wenzhou and then rebuild it as an attractive tourist destination," Huang says.

According to China's Island Protection Law, private citizens can use uninhabited islands for up to 50 years after obtaining approvals from the local governments, ecologists and environmentalists. But there are also riders on the scope of work that can be carried out on an island.

"Owners are not allowed to make serious alterations to the island's physiographic features," says Gu Zijiang, marine planning director at the Zhejiang ocean and fisheries bureau.

Users of the islands will have to pay a minimum fee. The amount will be calculated by taking into account the area of the island, potential method for developing the land, its use and the distance from the nearest mainland, says Gu.

The rent, according to local media reports, will vary from 100,000 yuan (11,168 euros) to more than 100 million yuan.

However, despite the blueprint of these islands and the attached luxury dream of relaxing on a resort island, officials from both Ningbo and Zhoushan ocean and fisheries bureaus say they are looking for rational investors with a long-term environmental protection plan.

"We won't lease out any of our islands unless the investor comes up with a reasonable and convincing business plan," says Liu Shunbin, deputy director of Zhoushan ocean and fisheries bureau. "It is also impossible to name the island as you wish although some of our islands are named after numbers."

Liu points out that there are no restrictions for foreigners keen on such investments. "From my personal understanding, there are no limits on who can apply for the right to use the islands, no matter if you're applying as an individual, private company or foreign-owned enterprise, so long as the development activities are within the permitted framework," says Liu.

But not everyone is confident the move will spur investments. An employee from the Ningbo ocean and fisheries bureau surnamed Yin, feels that there would not be many developers interested in investing in the islands scattered around Ningbo.

"I haven't heard anyone making any enquiries so far and I am not too sure many will," says Yin. "The reasons are simple - we don't have a mature evaluation system - how much would we charge for renting out the island? How long are we going to rent it? On top of it, we have no idea about market expectations."

Tang Hongsen, a professor at the Zhejiang Ocean University, says that the current moves find an echo in 2003 when the State Oceanic Administration said for the first time that private citizens and organizations were allowed to exploit such opportunities.

"But the moves did not gather momentum as developers realized the enormous transportation costs for the construction material needed to develop the island. It's also costly to equip the islands with electricity and clean water," Tang says.

Thirty-five-year-old Chen Xiaoxian couldn't agree more. The Wenzhou native was the first in the area to rent out the 80,000 sq m Zhuyu Island located near to the city seven years ago. "It was much more difficult than I expected," says Chen.

"My investments of over 1 million yuan was, like the water absorbed by the sands in the desert, gone in seconds."

"To take a simple example, it took me more than 100 yuan to transport one cubic meter of sand to the island," she says. "Most of the money went for developing wharf facilities, electricity and clean water supplies, road contractions and environmental protection."

There was no Island Protection Law in China when Chen signed the rental contract with local government for five years in 2004. "I only needed to pay a small amount of rent each year - something like 30,000 to 40,000 yuan- when both the local government and I reached an agreement that our bottom line is to take extra care of the environment."

Chen says she put seashells costing more than 200,000 yuan in 2007 alone. "The idea was to build a sustainable resort and attract high-end tourists, but it turned out we didn't earn a penny at all," Chen says.

The island has since been returned to the government after the contract expired in 2009. When asked whether she would invest in the island again after the release of the new list, Chen hesitates.

"It all depends on the details of policy - you know you still have opportunities there - I know there's a luxury yacht club nearby and I've got all these years experience of running an island."

Yu Ran contributed to this story.