Sark: investment opportunity of a decade

What you are about to read is a world premiere.

No one else has written about this investment opportunity yet.

Admittedly, no more than 1% of my readers will be able to act on it.

However, for those of you who do like this investment idea, it could turn into a life-changing discovery.

Two friends already dipped in their toes. They were among my guinea pigs to see if people like you and I could benefit from this unique, time-limited window of opportunity. They now say about it: "Swen, this was the best decision of our lives!"

I had teased this topic in past articles. Some of you have been bugging me to finally write about it.

Today is the big reveal.

The "secret" changes to investing in Sark

Sark is the small island I call home.

It's located off the coast of Normandy and famous for a whole number of things, including (but not limited to):

• Smallest independent state of the British Commonwealth.
• Independently governed as a "Crown dependency" since 1565.
• A democratic government that is run by a local parliament.
• Hereditary head of state, the Seigneur.
• Only 5.5 square kilometres.
• Just 400 residents.
• Cars are banned.

Every year, the island attracts over 60,000 tourists. It is mostly untouched and famous for stunning scenery and a gentle pace of life.

Sark regularly appears in the media, because it's the kind of quirky place that people love to hear about. The Financial Times even has a specialised Sark correspondent, Jemima Kelly, because her reporting about the island has proven wildly popular. Just last week, the pink newspaper published another in-depth article on Sark, reporting on how the island managed to remain COVID-19-free. 

However, there is a story that everyone has missed so far: the coming changes to the island's property market.

The "Sark Land Reform" is about to catalyse the island's most significant set of political, economic and financial changes since 1607. It will finally thrust the Sark property market into the 21^st century.

For over three centuries, mortgages were illegal on Sark. At the end of the 16^th century, some Sark residents had gotten themselves into hot water by taking on too much debt for gambling and risky mining ventures. As a result, the local community of the time passed laws that made it illegal to secure a loan using the island's real estate. Even back then, Sark sought a conservative approach to life and the stability that brings.

Sark's real estate transactions have been governed by a set of quirky laws. For example:

• Certain properties had to be left to the eldest son ("primogeniture").

• Large properties couldn't be subdivided.

• Some transactions were only permitted if the buyer had a British passport.

Outside of the actual restrictions, just the overall level of complexity put most people off investing in Sark. Renting has always been easy, and doesn't differ much from renting a place in the United Kingdom. But in a culture that values property ownership, the regulation of buying and selling real estate had been a hindrance.

Lo and behold, it's all going to change.

Over the past few years, some of these regulations were already dropped.

An entire grouping of significant changes – including the legalisation of mortgages – was passed by Sark's parliament in May 2019.

A few months ago, in April 2020, the Queen gave her consent to these proposed changes. The British Royal family are the feudal protectors of the island, and any changes by Sark's legislation need to be signed off by them.

Now that "Royal assent" has been given to the Sark Land Reform, it's only a matter of time before the laws get implemented on Sark.

To the best of my knowledge, no media outlet outside of the island has yet reported about it. The world has been too busy with the coronavirus crisis to pay attention to such seemingly minor developments.

They will, though, and soon. Word in the pubs of Sark is that the reform could come into effect as early as October 2020. My gut feeling is that it'll take a bit longer because nothing on Sark ever happens as quickly as expected. One way or another, though, it's going to happen in the foreseeable future.

On the day before publishing this Weekly Dispatch, I took the ferry to the neighbouring island of Guernsey. Sark's bigger neighbour (62,000 residents) is a well-recognised international financial centre, and it has banks dotted around its seaside capital, St. Peter Port. I am reliably informed that at least one bank on Guernsey is preparing to offer mortgages for properties on Sark. It'll probably be a conservative level of financing (around the 50/50 mark), but financing WILL become available for Sark real estate once the new regulation has been implemented.

So far, buying a home on Sark requires an upfront 100% payment of the price.

Obviously, this requirement limited the number of buyers, and particularly young buyers.

The lack of mortgages had long held prices down. Add to it Sark's economic crisis over the past decade because of a lack of planning and resulting bad demographics. Over the past 13 years, the island's population has shrunk by about 40%. There currently is a glut of empty and underutilised properties. Take a hike across Sark, and you'll easily find deserted properties.

For you, in turn, these developments have created a time-limited, one-off opportunity:

• Prices are down 50% from their 2008 top. To move to Monaco, you need GBP 5m to buy an apartment or GBP 20m to buy a house. On Sark, just GBP 500,000 get you a large house with a garden.

• The Sark Land Reform will soon enable new buyers to come in.

• COVID-19 has sparked new interest in Sark, as a place to get away from it all.

Sark could now be in for a dramatic reversal of fortune.

Those who are quick enough can get all sorts of benefits out of Sark, and these go well beyond just investing in property.

COVID-19 is a game changer for Sark

People who haven't been to Sark yet expect it to be a tiny, cramped island. Not so! You'll be struck by how empty it feels. The current population of about 400 residents is spread across 550 hectares of landmass. That makes about 0.7 residents per hectare, compared to 2.7 residents per hectare across the UK and 4.3 residents per hectare in England. Once you leave the main village on Sark where about half of the population lives, it's mostly green expanse.

Sark has never seen the kind of overdevelopment that you can find on neighbouring Guernsey, or in places like Spain. You can fix up or even replace an existing building, but adding an entirely new building is restricted to residents who have been there for at least 15 years.

Even during the boom of the mid-2000s, when tens of millions of pounds of tourism-related investment poured into Sark, the island only had 650 residents.

The population has since gradually sunk to its current level. Jobs fell away, and the local government didn't make an effort to bring in new residents. With the shrinking population came an alarming ageing of the community. The average age of Sark's population is now over 60, compared to 42 in the UK.

The local electricity company recently reported that 150 meters were showing zero usage. This gives an indication just how much empty real estate there is on Sark. Much of this has never been reported before in the context of investing.

Why do I know all this?

I first rented a house on Sark in 2004. Since then, I have been gathering a massive archive of information about the island.

During this period, I got to observe the political and economic crisis of the 2010s. I spare you the details, what's vital for you are the resulting situation and the likely future now that a whiff of change is in the air.

Since 2008, property prices around the world have risen by 100% to 300%. On Sark, they have dropped by 50%. There are no official statistics, but that's roughly how the market has fared. I have even seen properties change hands for 58% to 87% less than they were first advertised. Someone who owns a house in Central London could sell up and instead buy an entire chunk of Sark.

Relatively speaking, Sark has never been cheaper since the end of the Second World War.

Which in itself wouldn't be a reason for prices ever rising again. Cheap real estate can stay cheap forever. What's been missing so far was a catalyst.

Enter:

• Sark Land Reform.
• COVID-19.
• The global avalanche of debt and taxes, also known as "Project Zimbabwe".

Suddenly, Sark is coming back into focus – and forcefully so!

My phone hasn't stopped ringing

Some years ago, I decided to move all my personal belongings to Sark.

I had grown suspicious of the course that Western Europe was taking. It seemed to be led by a permanent caste of indistinguishable career politicians (if there was any remaining difference between large parties, I couldn't spot it). Mounting debts, unresolved social problems, and a habit of forever kicking the can down the road made me worry that something terrible was going to happen eventually. I figured that one day, the continent's mix of unresolved and ever-growing political, economic, and financial problems was going to prove explosive.

A virus from China was not something I can claim to have foreseen. However, fate has a habit of striking when you are least prepared for it. Europe got hit by COVID-19 at a time when much of its organism had already been weakened by decades of ineffective politics. The "rich" continent already had record amounts of debt when the crisis struck, and government finances are now effectively out of control.

During the past few months, I have been inundated (!) with questions from friends, professional contacts and readers. They wonder if they, too, could move to Sark.

Indeed, if you wanted to get away from the troubles of the world (without having to leave Western Europe), Sark is probably one of THE best places to consider right now: 

• Sark only levies minimal taxes. Few Sark residents have to pay more than GBP 4,000 in any given year. Some pay as little as GBP 1,000. Your tax return takes one minute to file, and you are done with the government for the rest of the year.

• Sark has remained COVID-19-free. Even if one case did make an appearance… Most people have a house with a garden, the island is sparsely populated, and there is a strict system to manage any flare-ups. A "lockdown" isn't too taxing under these circumstances.

• Stability and sanity. The government is debt-free, violent crime is unheard of, and social unrest is almost inconceivable. I travel to many places from Sark (like many other Sark residents), and I always enjoy coming back.

At the same time, the island offers:

• Fast Internet and 4G.

• Access to any kind of infrastructure and service that you need to run an international business. This includes the facilities on nearby Guernsey (45 minutes by ferry, or less than 15 minutes if you buy a boat).

• Low set-up costs, because property is so cheap. You can rent a decent apartment from GBP 900 per month.

You can see where this is going.

Sark is suddenly becoming obvious as the kind of safe haven that many people are now looking for.

Only, it's even better than that.

You can buy an entire lifestyle by moving to Sark.

Sea, nature, and scenic views.

A real community, where neighbours help each other.

The opportunity to rid your life of career politicians, power-crazed bureaucrats, and silly laws that rob you of your freedoms. All of Sark's members of parliament are volunteers, i.e., regular citizens, and there is no bureaucratic apparatus.

Sark offers a combination that suddenly many more people find almost too good to be true.

Only that it is true.

As the Financial Times put it in its recent article:

"As remote working becomes more common, remote islands like Sark might become more attractive."

Hell, yeah!

Never mind cutting your taxes down to a fraction of what you are likely paying now, which will make such a move pay for itself (and then some). Sark doesn't levy an income tax, capital gains tax, or inheritance tax. All the while, the affluent residents of other countries are wondering if one-off wealth taxes are coming their way to pay for the current wave of unprecedented, seemingly never-ending government largesse.

For years, friends and professional contacts couldn't quite understand why I had decided to base myself on what seems to be a remote island.

All of a sudden, the opposite is the case. People are envious.

But don't accept all of this just from me.

Two pioneer settlers from London

Andrew and Claudine Boast are two professionals and Internet entrepreneurs in their late 30s who were part of my social gang in London.

I have known Claudine for over a decade, and Andrew ever since Claudine roped him in as her boyfriend and then, husband.

Earlier this week, they volunteered to share their experience of moving to Sark. I shot a 19-minute video, which provides an outside view of life on Sark.

Andy and Claudine haven't made a property investment in Sark – yet. So far, they are renting (a gorgeous 16^th-century farmhouse with all modern conveniences). However, they are following the Sark Land Reform, knowing that it will fundamentally change the island's property market. And in the meantime, they have made other investments in their new life.

Claudine and Andrew were my guinea pigs (and they don't mind me calling them that). I figured that if they settle in well, others will follow.

Indeed, there are now several friends and colleagues who will shortly move to Sark. Nothing will stop them – not even the current travel restrictions (check this website for updated information). People are now even considering to sign rental contracts "site unseen", simply to ensure they get a foot in the door and to do so while prices are as low as they are right now. Also, EU citizens can still move here without the hassle of procuring a visa – but only for the remaining 146 days of 2020, before a new visa regime kicks in.

And they should. There is local support for repopulating Sark, including from the island's Seigneur who would like to see the population increase to 800 or maybe 1,000. There is no official law or decree for increasing the population, but as the holder of the feudal title to the island ("fief"), the Seigneur's leadership couldn't be any clearer.

Just for the avoidance of doubt, Sark will never be able to accommodate too many people. Everyone on Sark loves that the place is stuck in an era long gone by.

But even Sark cannot escape economic and financial reality. The island is currently teetering on edge, because the population is now too small to sustain businesses, such as the local supermarket. Sark probably needs to double its current population size to reach critical mass and long-term sustainability.

Right now, there are empty dwellings for at least 300 new arrivals on Sark. The Sark Land Reform could also enable the sub-division of large properties, or the conversion of some empty hotels into serviced residences.

The doors are currently wide open. The Channel Islands are a separate jurisdiction and not part of the UK or the EU. Within the Channel Islands, you have three jurisdictions that are in themselves independent: Guernsey, Jersey and Sark. They operate their own immigration system, but it is currently fairly easy and best summed up as follows:

• British and Irish citizens are let in without any questions asked.

• EU/EEA/Swiss citizens can continue to move there without undue formalities until 31 December 2020.

• Anyone else can move there if they have a work permit, an investor visa, or an entrepreneur visa – all of which are entirely feasible to get.

Sark needs more people, and the conditions to move there are as good as they will ever be.

Enter COVID-19, working from home, and the increasing political instability elsewhere.

Guess what all this will do to property prices in a place where prices are as low as they have ever been, and where supply is heavily restricted because of strict planning laws.

Exactly!

If you want to learn more about this

I am about to launch a new service that is aimed at helping people to settle in (or invest in) Sark. You can read all about it (hot off the press!) on my personal website.

If you want me to, I'll become your personal advisor (of sorts) for all things Sark. Remember, though, that there is only so much space available on Sark (plus, even my day only has 24 hours)! Which is why I'll have to limit this offer to a relatively small number of people. As ever, the pioneers get the best deal – in this case, an introductory offer for the first 25 people to hit the "Buy" button.

Alternatively, come and visit! If anything, Sark is a fun place to explore.

As ever, Undervalued-Shares.com aims to give you insights and perspectives that you won't find anywhere else. Today's Weekly Dispatch went slightly off-piste, as I don't usually report on opportunities around relocating or buying real estate assets. However, this was "by popular demand". And in this gorgeous summer weather many of you will be looking for some light-hearted summertime reading.

On that note, I am off to enjoy the sunshine… And catch some mackerels!

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