Harbour Island is but a sliver of Bahamian terra firma, 3 miles long and a mere 1.5 miles across at its widest point. It has no nightlife to speak of. A delicate infrastructure means blackouts are not uncommon. Its single airstrip has not been functional since the 1950s, and to reach the island, one must hopscotch through the Bahamas on planes, in automobiles, and on at least one very small boat.

All of which goes some way to explain why the price of Harbour Island real estate has nearly quadrupled in the past five years. In fact, it is undergoing a bona fide boom, thanks to the influx of corporate mavens seeking an alternative to the glitz of Saint Bart’s—a place where flip-flops are preferred dinner attire and billionaires such as Ronald Perelman and Barry Diller travel in beat-up golf carts.

According to local real estate agents, the most desirable land now costs more than $2 million per acre. Homes—most of them large clapboard colonials that would fit perfectly on Cape Cod were it not for their bright shades of periwinkle and lemon yellow—are fetching $1,000 per square foot. It’s partly a function of scarcity: On such a small island, the amount of waterfront land is limited, and second-home owners (there are only 220 winter-resident households) seem more inclined to combine parcels than subdivide them. It also has to do with the fact that high-powered buyers are willing to pay a premium to live in a place where they are treated like regular folks.

“The protocol here is so easy and relaxed and nonthreatening,” says Jay-Jay Precentie, a member of a noted local family who was educated in Europe and North America but who returned to the island to open an event-planning business. “When it comes to the big names, we see them as members of our family. We don’t see the negative things in the gossip columns; we see Naomi Campbell eating conch fritters and talking to fishermen on the dock.”

The price of a “starter” vacation home on the island has crept past the $1 million mark—and that doesn’t include a view of the pink beaches or turquoise sea. “A million bucks will get you a tiny cottage that needs a lot of work and is nowhere near the water,” says Robert Arthur, a Coldwell Banker agent and owner of Arthur’s Bakery, a local favorite frequented by the prince of Wales, among others. Arthur’s least-expensive waterfront listing is priced at $2.2 million and is “nothing more than a room with bed in it on 85 feet of beach.”

Harbour Island was originally settled by aristocratic British loyalists fleeing the American Revolution; in the mid-20th century its colonial charm drew members of the WASP elite, who were able to keep the place a secret for decades. The same could not be said for the fashion set that discovered the island in the early 1990s, making it the backdrop for innumerable photo shoots.

After Hurricane Andrew hit in 1992, Island Records impresario Chris Blackwell bought what was left of the Pink Sands Hotel, which had started as a blue-blood hideaway in 1951. Blackwell used Moroccan-themed chic to draw a new, buzz-oriented clientele. A few years later, supermodel Elle Macpherson and her then-partner, Swiss financier Arki Busson, bought a home, Villa Bee, giving a boost to the island’s social scene with their annual full-moon party. (Locals say she has been conspicuously absent since the couple’s 2005 breakup.)

The first wave of business moguls included Wayne Huizenga, former C.E.O. of Blockbuster Video and current owner of the Miami Dolphins, who purchased an eight-acre compound called Palm Grove for a reported $4 million in the early ’90s. (The deed for at least one parcel is in his sister’s name, since Bahamian law limited the number of properties a nonresident could own when Huizenga bought in.) Though at the time it was one of the most expensive real estate transactions in the island’s history, brokers speculate that the property would be worth some $20 million today. The similarly astute Blackwell is primed to sell the Pink Sands to the group of investors that owns the Coral Sands Hotel next door. One source says the asking price exceeds $30 million.

But it’s recently divorced leveraged-buyout king Perelman who did the most to create the current market. In November 2004, at the behest of his wife at the time, Ellen Barkin, he paid $13 million for a six-acre property called Dugdale, after the English lord who built it. Perelman has barely altered the modest three-bedroom home, and while he frequently visits Saint Bart’s on his 188-foot yacht, the Ultima III, locals say he adores the golf-course- and glam-free life on Harbour Island. “He brags about how he can walk around here without his bodyguards,” one resident says. “You can see how much he loves this place on his face when he’s sitting down at dinner.”

Dugdale sits at the northern tip of the island, at the end of an enclave called the Narrows, where the land begins to taper toward a rocky point. Once known as Millionaires Row, it is now referred to as the Billionaire Boys’ Club, because lowly millionaires have been priced out. Like many of the estates that lie along the Narrows’ bumpy dirt road, Perelman’s has sea-to-sea views, with both ocean and harbor frontage. Dugdale also abuts a nature preserve, making it the most secluded part of an island known for its privacy.

Perelman’s Narrows neighbors include Barry Diller and Diane von Furstenberg, who own a five-bedroom home called Samana; duty-free titan Robert Miller, who reportedly bought his home from Bernard Ashley, founder of Laura Ashley, for about $6 million in the late 1990s (his very social wife, Chantal, recently threw a party that one guest said was like “standing in the middle of a Vanity Fair article”); and J. Crew C.E.O. Mickey Drexler, who just bought the home next to his own from ’80s rocker Daryl Hall. He also reportedly paid $9 million for a property on the harbor side that contains nothing but a swimming pool, a rare amenity. According to one local, Drexler’s is the only home on the island with an electronic gate.

So far, most new residents seem to be abiding by the island’s unspoken code that frowns on building the kinds of monstrosities seen crowding beachfronts from the Hamptons to the Turks and Caicos. Many of them keep the rustic villas that come with the properties. Locals are more concerned about the development of condo-and-marina complexes, one of which was recently built on the western shore of the island. The object of much scorn, it features eight two-story units that are selling for as much as $1 million each and a marina with slips for boats up to 150 feet long.

To prevent developers from building any more of these types of complexes, a group of residents founded the Save Harbour Island Association in 2005. Working with the Bahamian government, the association is developing a master plan for the island, hoping to limit future development, lest Harbour Island turn into another Miami Beach and the superwealthy abandon it in favor of a less-crowded tropical playground.

“We’re afraid that people like Arki Busson and the Millers will leave if things get too out of hand,” says one resident. “Our concern is that they will no longer see Harbour Island as a home. We don’t need to be Saint-Tropez. We’re trying to keep it special. We don’t look forward to seeing people with Gucci sunglasses and Birkin bags riding in golf carts.”