The Interest in fractional ownership on the rise

General interest in fractional ownership in SA is on the rise, with interest from the UK, USA and Canada showing good growth.

“Month-on-month we are seeing higher numbers of unique visitors (separate individuals) entering our fractional ownership pages across all websites in The Fractional Network, which is now averaging 7,000 to 9,000 unique visitors per month. The number of visitors from the UK, USA and Canada is on the rise, and we are finding that visitors are really looking at many resorts, since the number of separate pages viewed during each person’s visit to our websites is also increasing, to about five pages per visit,” says Dirk Wilson of fractionalownership.co.za.

Wilson says consumers are shopping around to compare the three L’s – location, leisure amenities and luxury. In terms of price, he says that now more than ever before, fractional investors are seeking as many value-added benefits as they can, at the best possible price.

“Fractional investors are willing to pay less for the privilege of owning smaller blocks of time; subsequently, fractional promoters are releasing products that offer smaller (more flexible) usage periods in luxury fractional residences. Investors now have the option of purchasing two weeks as opposed to four weeks, naturally at a lower price per share. More promoters are offering 7, 14, 21 and 28 days’ usage per annum. Down the line fractional owners will be able to upgrade by purchasing more time in the same residence or resort, or in another resort offered by another promoter.

“It appears that the general consumer perception of a fractional ownership purchase is one of a direct real estate investment with lifestyle benefits such as usage, exchange and formal resale (or exit) agreements. Most consumers are also seeking substantial rental returns on unused time.”

Wilson says that although consumer interest is increasing, sales conversions are down, which he attributes to a number of factors, including fractional promoters withdrawing or advertising less, general uncertainty about investing in real estate due to economic pressures, lack of cash or access to specialised lending, as well as confusion between shared vacation ownership purchase options (timeshare, fractional, condos, private residence membership, destination and points clubs).

He says the landscape for fractional promoters is set to change through their adoption of a shared ownership body, as in the US market with ARDA (the American Resorts Development Association) and Europe with the RDO (Resort Development Organisation). The newly formed Vacation Ownership Association of South Africa (VOASA) now encompasses the various vacation ownership products (such as timeshare, fractional ownership and private residence clubs) under one umbrella organisation.

“We think that consumers will now be more informed as to the different shared ownership products available to them, and how they vary from one another. VOASA will take a major role in assisting and supporting the public here. This is timely, since another trend is that more and more resorts are offering timeshare, private residences, fractional, condos and whole ownership products, all on one site and managed by one hospitality operator.”

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