Think Ibiza and you’re probably imagining pill-popping hedonism and beered-up lads on budget flights. This small Balearic island has another side, however, one that has, until recently, remained tucked away amid the pine-topped hills and olive groves: a world of private jets and retinues, where privacy and discretion are key, and money is never, ever mentioned.

Forget all you’ve heard about foam parties; picture 10-bedroom supervillas and lava-stone infinity pools. Ibiza is fast becoming Europe’s most prestigious summer address, as hedge-funders, film directors, Saudi Arabian princesses and “sophisticated bohemians” - the moneyed British elite – flock there for the ultimate chillout.

“Hedonism is a small part of island life,” says Lady Fritzi Northampton, a German-born former modeland resident of Ibiza since 1989. She has written a bookabout the island’s lifestyle and represents the agent Aylesford International. “People come in private jets; a chauffeur collects them at the airport and whisks them off to their secluded villa.”

Fifty miles off the Spanish mainland, Ibiza has been a fashionable destination since hippies discovered its spiritual “vibe” in the 1960s – Es Vedra, a tiny island just off its southwest coast, is said to be the world’s third most magnetic point, after the North Pole and the Bermuda Triangle. Since those early days of love, peace and full-moon parties, a new travelling class has moved in, lured by the high standard of living, high resale values and hefty summer rental yields: between £2,800 and £30,000 a week from June to September.

Too close for comfort

Is the wrecking ball about to smash into swathes of properties built too near the beach?

Background

• Pensioners’ pain in Spain

• Stormy outlook for British homeowners in Spain

• Spanish property doctor

• Homes under threat as Spain moves to clear coast

• Tenerife attracts the champagne set; but has bargain property prices

Related Internet Links

• The lowdown on Spanish property

Background

• Costa bravo

• Spanish property doctor: Beware of buyers who flash the cash

• The surreal deal

• Amor at first sight

Background

• Fortune blows on Spain's windy city

• A sunnier retirement

• Villas with a vintage

• Ask the Experts: The estate agent

Background

• Is the global property boom set to end?

• Hablamos Ingles

• Shelter from the sun

• Buying on the Spanish islands

• Still plenty to gain from a home in Spain

The top tier of the market is not only surviving but thriving amid the credit crunch. “Over the past three or four months, there has been huge demand for high-end properties,” says Alex Vaughan, a partner in the Barcelona-based estate agent Lucas Fox. “I’m getting calls about properties priced at between €6m and €15m (£4.8m-£12m) every two weeks; before, it was for €2m or €3m villas. The idea of Ibiza as a cheap destination has disappeared.”

Local authorities are keen to promote the island’s growing reputation as a haven for the super-rich. Three years ago, Ibiza had one five-star hotel; by the end of this summer, there will be six. An Irish investment firm has been given the go-ahead to build the first luxury hotel in San Antonio, traditionally the clubbers’ favourite, and Ibiza airport now has a terminal for private jets – 43 landed in just one day earlier this month.

It was the laid-back appeal of Ibiza thatattracted Susan Sangster, 51, former wife of Robert Sangster, the late racing tycoon. “Ibiza is not intrusive or posey; it’s the total opposite of ‘see and be seen’,” she says. “You can do it however you like. I’ve only been clubbing at Pacha twice in all the years I’ve been coming here.”

Sangster, who spends winter and spring on her Barbados estate, first came to the island 11 years ago with her children – Melissa, now 27, Sam, 21, and Max, 18 – and bought a six-bed property there in 2003. She took one look at the finca on the hillside of the exclusive Es Porroig peninsula, in the south of the island, with its view of yachts bobbing in glittering waters, and knew she had to have it. Life is a relaxed round of taking out the family Rib (rigid inflatable boat), supper parties on the beach and personal trainers. “It’s thanks to summers here that my sons have their boat licences before their driving licences,” she says.

Not surprisingly, a new breed of developers and designers has sprung up to cater to this influx of wealth: the top-end properties on offer have staff quarters, guesthouses, terraces and breathtaking views as standard.

Philip Gonda, 47, a Belgian hotelier and developer, has built Can Curt, a Balinese-inspired villa in the Morna Valley, near Santa Gertrudis, in the centre of the island. On the market for £3.89m through Aylesford International, the six-bed, 600-square-metre house has staff accommodation and an infinity pool built with lava stone, which, because of its black colour, retains heat in cooler weather. Gonda expects the house to be bought by one of Ibiza’s growing band of flexi-workers – “a businessman whose company is in, say, Berlin, and who will spend three days here with the family and four at the office”.

You could save 20%-40% by building yourself, but it can be difficult without good contacts. “The planning regulations change from one municipality to the next and depend on the politics of the government constituency,” Gonda says. “If you don’t speak Spanish, you’re lost.”

The island may have turned relaxation into a fine art, but expect to pay at least £6m for the ultimate “chillout” – the kind of place where you step lazily from your property straight onto your yacht. If you are happy with just a decent sea view, prices start at £1.6m for a villa and £500,000 for a two-bedroom flat. Engel & Völkers (00 34 971 311336, www. engelvoelkers.com ), which has offices in Ibiza Town and Santa Eulalia, isselling a three-bed villa in Cala Carbo,overlooking Es Vedra, for £790,000.

For the ultra-rich, separate houses for guests arede rigueur. “Ibiza is about sharing time with friends,” says Paloma Bonder, director of Ibiza Solutions (www. ibizasolutions.net ), a luxury concierge service launched in 2006. “But my clients also want privacy. They spend 70% of their time at the villas, pay about £1,000 a day to rent a yacht and sail over to the coves at Las Salinas and the island of Formentera.” Bonder was once asked to fly staff and ingredients to Ibiza from El Bulli, the world-renowned restaurant in Roses, on the Costa Brava, to prepare a meal. Typical of such properties is Villa Bikin, in Santa Ines, a three-bed home with two one-bed guesthouses, on sale for £3m with Lucas Fox, in association with Quintessentially Estates. Guests can choose between an opulent pool house and an Indonesian hut set in a pine grove.

Most high-end properties are marketed by more than one agent, and are sold with furniture included. “Clients want to be given the key and not have to think about the details, or even whether there are any towels,” Bonder says. Buying is relatively straightforward if you ensure all paperwork is checked by independent lawyers; fees, taxes and other costs will add 8% to the price.

For those ready to do without staff and a heliport, there are affordable homes in rural areas a 15-minute drive from the beach, especially in the quieter parts of the north, where two-bedroom villas start at £590,000.

Stephen Woodhams, 44, a horticulturalist with upmarket clients in both London and Ibiza, bought his two-bed finca in the hills above San Juan in 1999. He is reluctant to say how much he paid, but admits it was considerably less than the £1.3m for which a nearby property recently sold. “This part of the island is popular with artists – you’ll see them at the new organic pizza place, or in the cafe checking their e-mail,” he says.

Woodhams is saving for his infinity pool and, instead of a £16,000-a-year maid, has a local woman who occasionally comes to stock the fridge. “This house is my life’s work,” he says. “I would sell everything I have to make it happen.”

Times recommends

• Spanish property: why it's crunch time on the Costa del Sol
• Strong Euro and credit crunch impact overseas property buyers
• How to find the perfect Paris pied-a-terre