2009-09-21 13:33:13 - Industry specialists have responded to recent comments that fractional may not be the best way to buy overseas property due to current economic conditions.

Linda Travella, media spokesperson for the National Association of Estate Agents (NAEA), recently commented: "I don’t think that fractional is necessarily the way to go because of the recession." Citing falling prices for whole ownership, she argued that it is easier for buyers to pick up bargains overseas and, even if not as luxurious as fractional offerings, she felt that sole ownership still gives an affordable route to overseas ownership and the prospects of better returns.

The comment follows an NAEA warning for consumers to also ensure their fractional purchases are not actually ‘dressed up’ timeshare schemes, as reported on Newskys.

However, shared ownership commentators have argued that, during the recession, the value of fractional ownership is actually magnified.

Paul Doyle

of The Crane, a fractional ownership resort in Barbados, responds:“The main arguments for fractional ownership for many remain the same in difficult economic times, and in fact take on even more weight, given that potential owners are watching their finances even more carefully. Fractional properties are still available for a fraction of the cost of purchasing a residence outright, and owners are able to buy only the amount of time they wish to use each year (and not worry about the rest of it). People are still buying fractional because the desire to vacation is as strong as it ever was.”

Fractional consultant David Disick agrees: “I think today's buyer realises that actual vacation home use is rarely more than a few weeks in a year. Accordingly, they similarly recognise that fractional ownership makes sense, especially in the current economic climate, where a lower price point is appealing.”

Part of the value-add with fractional can be the exchange element of the purchase, with Doyle noting: “Potential buyers who wish to enjoy holidays around the world can benefit from the opportunity to exchange their fractional units for other vacation destinations using one of the established exchange companies.”

Surveying the market in the Middle East, Jeff Tisdall, Middle East managing director for Group RCI,agrees, noting that they have seen increased exchange activity over recent months: “The cooling of the Dubai property market and the approaching completion of flagship tourist developments has ironically created significant opportunity and intensified interest in vacation ownership and private residence clubs. Today’s market for leisure real estate is quickly moving from its investor orientation of recent years towards an end-user and leisure focus. By creating ownership interests that offer an annual allotment of personal usage to match consumer needs, shared ownership is the ultimate end-user product.

“We have certainly observed a heightened interest in vacation ownership, fractional and private residence clubs. Positively, shared ownership owners continue to travel during market downturns as they have already purchased at least one shared ownership interest and therefore own an asset which they can exchange for vacations worldwide. Interestingly, we have seen an increase in exchange activity by our Middle East members over the last 12 months.”

Another benefit of fractional is identified as access to locations you otherwise still wouldn’t be able to buy into, and demand is still present for these offerings. Consultant Dick Ragatz, writing in Vacation Ownership World, notes that "more than three in four fractional developers felt that the sales performance was as good or better than that of whole ownership developers in their local market area., While sales were down last year and there were fewer projects in active sales, sales are still being made in the so-called iconic locations that will always have a highly perceived value. They are situated in places with limited land being sold at very high prices."

Les Milton, chairman of The Fractional Ownership Consultancy, adds that an additional attraction of fractional is the ‘hassle-factor’: “During recessionary times, buyers prioritise what is important to them, and many decide they no longer want the costs and hassle associated with whole ownership purchases.”

Ultimately, Brad Lincoln, CEO of fractional consultants The Best Group, argues that the decision whether to buy fractional or not shouldn’t rest on a decision over the concept – it is all about finding the right way to buy the right property: “The first piece of advice I would give any buyer is not to buy a ‘fraction’ – rather buy the place they want to own. It’s not about buying into a concept - it’s all about access to the dream home. It should be ‘I want to own a villa in Provence, not ‘I want to own fractional property’. So, ask how often you will realistically use the property and how much you can afford to spend. Then go and see where the value is – look at full and fractional ownership, and make an informed decision.”

ENDS

Notes to editors:

A joint venture between TheMoveChannel.com and Richmond Green Group, NewSkys.co.uk is a new portal specialising in fractional ownership property. Combining TheMoveChannel.com’s technical and online marketing experience with Richmond Green Group’s knowledge of the fractional ownership sector through its consultancy business RGM Fractional, NewSkys is the place to find all the latest fractional ownership investment and lifestyle opportunities.

For further information, please contact +44 208 439 9496