If the latest statistics are to be believed, fractional ownership is one of the fastest growing forms of property ownership. In the first of a three-part series, we guide you through the new route to gracious living. Words Isobel PalmerWe are a nation known for its love of ownership. Homes, cars, electrical goods; we like nothing more than to shop, acquire, collect and keep. With fractional ownership comes a new way of owning, and it seems to make perfect sense in a period when money is tight and investors are cautious.
The logic goes like this: why own a whole villa or apartment for the whole time if you only need it a few weeks of the year? Why risk all your own money on investing in a second home when you could share it with a few like-minded others?
Take this example: a developer buys a property for £400,000 and sells it to four different families for £125,000 each. For the extra £25,000 from each party, the developer puts in furniture, sees to the golf club and spa memberships, the upkeep of the gardens and pool and pays the legal fees. You, as part-owner, are left with a chunk of something palpable – bricks and mortar.
If this were a timeshare (and this is not a word to bandy lightly around the fractional development bods, who are largely wary of its pejorative connotations), you would pay a price for a week inflated to cover marketing costs. The vendor may raise £600,000 but the reality is that this is no more than £600,000 of fresh air for the buyers. You own a mere piece of time. You may be quite happy with it, because despite some problems, there are many good timeshare schemes out there. But it
is easy to see why there are investors now looking at converting to fractional ownership instead.
Jerry Cobb, of the Fractional Ownership Consultancy, believes the concept of sharing is popular with a certain type of investor. Trustee banker Jerry was in at the start of the trend nine years ago and has been at the centre of its growth. He says: “We are selling an aspirational lifestyle. If you live in a large detached house, why would you go on holiday to an apartment? Why not enjoy the luxuries you aspire to?”
Piers Brown, president of www.fractionallife.com, which he founded in 2006, agrees. “People these days are questioning the idea of 100% ownership – it’s not what you own so much as what you do, and what experiences you collect in your life.”
This philosophy appears to have a groundswell of support. From around 20 European schemes in 2006, Piers estimates there are more than a 100 this year. And he has seen web traffic on his site double in the last 12 months, to 1.4 million hits.
On his website, there is plenty of advice and information, including a guide to the top 25 questions to ask a developer before buying. It ranges from such basics as ‘is the property deeded’ to ‘what happens if the property company fails?’ It’s a good place for an investor to begin their research.
But Piers admits fractional ownership is not for everyone. “The super rich don’t need it,” he says. “And it’s not for those who want to own everything or who think twice about making a financial commitment. I see it more for the 45s and upwards with families, who are looking for time to enjoy the good things in life.”
It’s not just property on offer in affordable portions. Wander round the website and you enter a world of sharing sports cars, jets, greyhounds, designer handbags and even allotments and truffle oak trees in France.
It’s no surprise to see luxury yachts and boats there, too, for this is where some say fractional ownership began. Jerry Cobb explains: “Lloyds Shipping Register listed cargo vessels in 64ths to allow traders to own chunks – it’s been going on for centuries. There are financially savvy reasons for sharing property abroad and that’s why the demand is growing.”
Read more in the April 2010 issue of Living Abroad magazine
