W
With real estate seemingly stuck in a nosedive,
some sectors continue to offer investment prom-
ise. The luxury fractional ownership market, still
in its infancy, may be the perfect opportunity,
offering relatively high returns and showing
strong sales growth even in today’s market.
Imagine a 4,000-square-foot luxury working in the gourmet kitchen — with
home, overlooking aquamarine tropical its 4-inch granite countertops and duo
waters and white sandy beaches. There’s SubZero refrigerators — filleting the
an infinity pool outside the master fresh local catch for dinner.
bedroom with rollaway walls to bring Now imagine that this vacation home
the outdoors inside. A personal chef is doesn’t cost $3 million. You could have
it — or sell it — for
Project Feasibility Checklist
a mere fraction of the
cost, say $500,000
for a one-eighth
K
eep the following questions in mind
ownership share.
The fractional
when you’re considering investing in ownership segment
a property for fractional ownership:
of the vacation home
market is characterized
Is the development located at a popular
by high-end proper-
resort destination with strong visitation or
ties, from condomini-
a strong brand?
ums to single-family
homes in the most
does it sit on a great location within the resort,
sought-after destina-
be it a ski-in/ski-out, beachfront, or golf course? tions around the
Is there access to a database of resort visitors
world. “Buyers might
and local real estate prospects?
not be able to afford
whole ownership in
Is the project adjacent to, or in association with,
the kind of luxury
a fine hotel for services, dining, and amenities?
residence they want
Is there a limited supply of second homes in
to be in,” says Randall
the area, and is existing inventory expensive?
Harris, a fractional
developer and
Is the project close to a large affluent visitor
consultant with
base or urban center?
Island Fractional
does the location have year-round appeal or Homes, “which
at least two strong seasons? makes fractional
Is the fractional project first to market in that
ownership all that
location?
more appealing.”
And all the more
Are there other services or amenities of note
lucrative for developers
to add to the storytelling? and investors.
Is there a well-designed use plan?
Fractional proper-
ties sound a bit like
What is the price point of competing products,
timeshares, but don’t
such as whole ownership homes?
be fooled. Most
Are the ongoing fees adequate enough to
timeshares don’t
cover the property management, concierge
exude this level of
services, utilities, repairs and maintenance,
luxury. Timeshares
and eventual replacement of furnishings?
are prepaid vacations,
growingwealthmag.com I Growing Wealth I July 08 I 19
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