Reggae to real estate: when the jamming stopped, the building started in Jamaica

He gave us Bob Marley and U2, but when Island Records got too big, Chris Blackwell got out. Maggie Lee hears about his new beat

As rock stars crusade with Al Gore across continents to save the earth, Chris Blackwell is simply going back to his roots.

The founder of Island Records – who discovered Bob Marley (pictured below) U2 and Cat Stevens – is assiduously developing Island Outpost, the luxury hotel and resort business he began in 1988.

"When I sold the record business in the Eighties, my original vision was always, despite a detour in Miami, to develop smallish, beautifully located properties in Jamaica and the Bahamas – in effect, to create places that are cared for like home, " he explains. "Now my focus is back in Jamaica on the Goldeneye Project."

Born in England and raised in Jamaica, the legendary entertainment entrepreneur is referring to his Jamaican coastal resort, the former home of James Bond author Ian Fleming. Since selling Island Records to Polygram for around $300m (£146m), Blackwell has been making waves in the leisure industry, investing in properties in the Caribbean and the US.

Over two years, Island Outpost will build and sell 80 luxury homes (a mix of cottages and villas) across the 40-acre Goldeneye resort. Marketed internationally, prices will range from $600,000 to $3.5m. Prospective owners will be able to borrow up to 70 per cent of the costs from a local mortgage provider. They'd put their homes into a rental programme, managed by the company, which has four boutique resorts in Jamaica – including the luxurious Strawberry Hill favoured by celebrities.

Blackwell's plan is regarded favourably by the Jamaican authorities, largely because they anticipate it will bring capital and employment opportunities to the island, but also because of their confidence in Blackwell as an eco-friendly entrepreneur and philanthropist. (He supports local community projects through the Mary Vinson Blackwell Foundation, set up in memory of his wife.)

Blackwell, though, is the first to play down his eco-credentials: "I'm no purist like Brian Eno. You won't find Brian travelling to events Gore invites him to if it increases the carbon footprint!"

Nor is he inclined towards self-promotion: "I really only got known when I sold Island Records. Till then, I'd always avoided publicity."

Quietly effective, though, he has always been, and he has managed to combine his entrepreneurial spirit with his twin loves of music and the Caribbean. The son of a Jamaican mother and Irish father, he attended school in England, returning to Jamaica in his late teens. "I had a good grounding as my father loved classical music. I also discovered jazz at school," he says.

His entry into record production came through a water-ski concession he had created in an uncle's hotel. "I approached musicians performing in the hotel and started to record them. In those days you could record in a day, master the tapes in New York, bring them back, press and sell."

Within months he had assembled a small coterie of artists and shrewdly licensed distribution deals in the UK. Local competitors fought back and, despite a succession of hits in Jamaica, sales began to decline. On the back of Jamaican independence, he left for London in 1962. "You could sense there was a different vibe," he explains. "And while I regarded myself as Jamaican, I was packaged like an Englishman. On top of which sales were better in England as my records became more polished. "

Over the next 25 years, Blackwell was to develop an independent label that acquired international and iconic status. At its zenith, Island employed some 200 staff and produced revenues of around $350m. Worshiped by artists for his management and creative integrity, his first global hit was the Jamaican singer Millie's recording of "My Boy Lollipop", which had generated sales of around $6m by 1965. The subsequent signing of blues musician Steve Winwood was to prove magnetic, attracting top talent to his label.

Critics have attributed Island's rise to the commercial environment of the time – less competition, rising consumer demand and a series of lucky breaks with ground-breaking artists. Blackwell's former colleagues disagree. They cite his extraordinary ability to steer the careers of artists and his intuitive production approach. One describes him as the "consummate gentleman, as comfortable chatting to a Rastafarian as the Queen".

By the mid-1980s, though, Blackwell had decided to sell. "It became too corporate. If you're a small company and start trying to play the game like a big army, you don't win. The only way you'll beat a big army is with a guerrilla force."

Moving into hotels was an easy transition: "As I made money in music, I invested in property." And although his ambitions lay in Jamaica, he "got sidetracked by the opportunity to pick up some properties very cheaply in Miami". He was, he says, lucky to acquire "a job lot of hotels long before the market had seen the potential of South Beach".

A fortuitous introduction to Barbara Hulan-icki, founder of the 1960s fashion giant Biba, spawned another successful creative partnership. Together they redesigned and developed a series of hotels – including the Tides and the Marlin – that were credited with the revival of Miami.

Blackwell acknowledges that "it hasn't always been plain sailing", citing Palm Pictures, the film and music company he founded in 1998, as a problem. "I sold my Miami properties in order to finance Palm," he says.

Now aged 70, he shows no signs of retiring or regret. "I'm a pragmatist. You do the best you can and move on. But I did pass on Dire Straits, Pink Floyd and Elton John. That's enough," he laughs. "Back then, I thought Elton was too shy and retiring to be a performer."

And finally, what advice would he give to an aspiring independent producer as the music industry is convulsed by change? "Be internet savvy – you need to keep up with the evolving model. But ultimately, you still need to develop long-term relationships with your artists."