Fractional Ownership
Last week I was at the OPP Live expo in London Excel - one of the UK's largest (if not the largest) event for overseas property professionals.
A striking finding was the presence of many Fractional Ownership developers and advisers in an event like this.
Not only were there new entrants to the Fractional market, but more importantly a number of larger players were there with a mixed marketing strategy incorporating whole ownership, fractionals, SIPPs etc. This direction of the market has been predicted for some time, as clients become more versed with the different ways they can invest in property and demand products that more closely match their requirements. But this year is the first time I see strong evidence of this trend across a large percentage of companies.
Fractional Ownership makes a lot of sense for developers and for end users alike:
For an end user, it allows buying only the amount of real estate that you are going to use, therefore reducing the cost of ownership. You wouldn't buy a car and leave it in your holiday destination idle for 11 months of the year, so why do this with a house? End users can also enjoy buying multiple fractions thus diversifying their property portfolio.
For a developer, it provides an additional revenue stream and access to a much wider market. A mixed marketing strategy will ensure people of different incomes and appetite for investment can invest in the same property. Developers will also enjoy a resort with higher occupancy rates throughout the year.
The model is popular in the USA and it seems to be coming of age across the world.