Minimalist paradise

According to Greek legend, Heracles killed the giants on the island of Mykonos and trapped them under the earth using the island's giant rocks. The giants may well still be hanging around underground, as to this day nobody is willing to move the rocks to find out any different - houses are simply built around them. Rocks feature heavily on Mykonos, as do the iconic white-cubed houses with blue shutters, the only type of house you'll see here. There isn't much else to this stark and dramatic landscape. Nothing green seems to grow; it's like the surface of the moon. The granite brown of the earth is interrupted only by the cool white of the houses and the piercing turquoise blue of the sea.

First-timers to the island might be surprised at how wealthy Mykonos is - not at all like the rustic idyll portrayed in the film Shirley Valentine, which was shot here. There are more five-star hotels than you can shake a souvlaki at, and in the uniformly whitewashed Mykonos Town - with its narrow alleyways, famous windmills and mascot, Petros the Pelican - you'll find shops selling Armani dresses, Rolex watches and Chloe handbags. There is even a Nobu restaurant in the Belvedere hotel, and excellent beach restaurants at which to enjoy leisurely lunches and dinners before retiring to your sunlounger. In atmosphere it is much like Ibiza, but with marginally less posing.

Celebrities have flocked to the island; Elizabeth Hurley was snapped here earlier in the summer; Sarah Jessica Parker, Tom Hanks and Madonna all spent time here recently, and Jean Paul Gaultier and Roberto Cavalli own holiday homes. The Greeks consider it their St Tropez and, with wealthy Athenians willing to pay Dh128 million for property here, you can see their point. It is, by some way, the most expensive of the Greek islands to buy on. "Mykonos continues to be a law unto itself," says John Batty of Aegean Blue. "Investment continues to pour into high-end properties, with the majority of buyers being high net-worth Greek shipowners and entrepreneurs who compete to have the biggest and best villas in the most stunning locations. While other sectors of the market have been affected by the economic downturn and the credit crunch, at the top end there is substantial liquidity, and prices for development plots rose by an estimated 20 per cent in the past year. There is no obvious reason to see this trend being reversed while Mykonos remains the social magnet for vacationing Greeks and celebrities, and while the super-rich are willing to pay prices that bear no relation to the other Greek islands."

The south and the east of the island are the most desirable areas in which to own property - including the areas of Agios Stefanos, Tourlos, Agios Lazaros and Agios Ioannis, where a 4,000 square metre plot can sell for Dh7.6m. Panormos and Agios Sostis, towards the windy north of the island, may prove a good investment in the future, according to Batty. A 4,000 square metre plot there can fetch Dh5m.

Roi Deldimou, who works for the newly opened office of Beauchamp Estates estate agency, says the starting point for two-bed flats is Dh2m and Dh3m for a three-bed. She is selling a reasonably spacious two-bed house in a development in Ornos in the south of the island, 3km from Mykonos Town, for Dh2.09m. The property, a five-minute drive from the beach, comes with a balcony, a sea view and a terrace in front of the villa. There are the usual white stone walls, as well as wooden ceilings, while a large living space next door to the master bedroom could be used as an extra study or dressing room. There is also access to a communal pool. In Kounoupas, in the middle of the island, an attractive four-bed house is for sale within a small development set on a hill. The design of this place is minimalist monochrome; there are floor-to-ceiling windows, stone seats in the living room and a small dressing room off the master bedroom. The contemporary furniture - all white and a lot of it from Ikea - is included. Again, there is a communal pool. The price tag is Dh4.84m.

Things start to get more expensive when you look for stand-alone villas. Beauchamp is selling a four-bed house with a large terrace, spectacular sea views and a pool in Pouli, on the southwest of the island, for Dh12.73m. Close by, in Lia, an undeveloped, quiet part of Mykonos, there is a five-bed villa with a pool and two separate guesthouses. Built by an interior designer, it is on the market at Dh25m. It's an instantly attractive property, with good-sized rooms bleeding into each other - downstairs is the kitchen, living room, master bedroom and bathroom - and quirky bookshelves carved out of the stone. The outside terrace is large, with a shaded area for eating alfresco.

The estate agency Cluttons has also recently started selling on the island. Robert Key, its Greek-based partner, explains why Mykonos is so popular with the Greek rich and famous. "The benefit of Mykonos to these buyers is that, aside from being within easy reach from Athens by air or sea, it is the in-place to be, especially for celebrities, and if you are rich and famous you are sure to find your friends and make new important business contacts there."

Key says that capital growth for the middle of the market has been around the five per cent mark, but that the top end is seeing higher capital returns. As more and more non-Greeks holiday on the island, the rental market for luxury villas is taking off in particular. "It is not uncommon to find weekly villa rental prices ranging from Dh25,453 to Dh50,906 and more during peak summer time," he says. "Of course, prices depend on location, size and quality of property, as well as range of services offered." Indeed, Beauchamp has a seven-bed villa for rent - complete with an infinity pool, an indoor banana tree and the high-end minimalist setting that looks like the backdrop of a fashion shoot - for Dh273,876 a week.

The market is cosmopolitan. While the majority of buyers are Greek, there are some British, American and Italian nationals snapping up holiday homes, too. Despite prices being far higher here than on the other islands - much pricier than nearby Skiathos, for example, where Mamma Mia was recently filmed - the high weekly rental return is proving persuasive. While demand for top-end villas is still strong, the mid-market has softened somewhat. This has been put down to the economic slowdown much of the world is feeling. Robert Key suggests that this has not translated into price falls because developers are generally debt-free, and therefore in no hurry to sell. "Buyers of properties in the range of Dh2.5 to Dh5m may find themselves in a good position to choose from a range of properties in good locations," he says.

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