Benefits of fractional ownership for resort owners & developers

Fractional ownership not only changes the variables of property ownership but also creates some interesting opportunities for developers in the ways they can price, market and sell their product inventory. Just some of the advantages include:

Increased market reach. By selling fractions in a property, developers drastically reduce the entry price level of their inventory, thus opening up their product to new markets. Many potential buyers who were previously not able to afford outright ownership or prepared to expose themselves to the risk, hassle and costs of whole ownership, can find that the property is affordable to them in its fractional form.

Increased sales revenue. With fractional ownership the achievable price of the (combined) fractions can be greater than the property’s (whole ownership) sales price. The fractional “mark-up” should not be abused, however, it can present some additional opportunities for developers and resorts to maximise their profit from every unit sold. It is accepted by the purchaser that they will pay proportionately more for a fractional, however, this can be offset by the fact that their management and maintenance costs are shared and hugely reduced.

Shifting unsold inventory. At a time when whole ownership property sales across the globe have been affected by the economic slowdown, fractional ownership can provide a solution for selling units which have failed to sell under outright ownership or achieve the developer's desired sales price. When property values are stagnant, buyers are less incentivised by potential returns on their investment however, people still want to have all the benefits of second home ownership. Fractional ownership provides offers these benefits but without the capital outlay.

Increased resort occupancy. Statistically with whole ownership of a holiday residence, owners only tend to use their property for a few weeks a year. Unless the property is rented out during the other weeks a residence can sit empty for the majority of the year. Fractional ownership creates multiple owners of a single property, who tend to buy a fraction which correlates to the time they actually intend to use the property. Therefore fractional residences are more likely to be occupied for a larger proportion of the year, with resorts benefiting from increased occupancy and spend at restaurants, golf courses and other facilities they offer.

Variety of product offering. By providing both whole ownership and fractional sales, developers are able to create a variety of ownership options giving themselves the best chance to tailor second home ownership to potential buyers.

Environment. As the vacation real estate market grows, coastlines and locations of naturally beauty can become over built and populated. In a world where prime real estate plots are becoming scarce it is a positive thing for the environment not to build hundreds of properties which only get used and enjoyed occasionally throughout the year. Looking to the future, asset sharing is a sensible and more sustainable concept for the secondary housing market.