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Aug 13, 2007:
Leisure property investors are becoming spoilt for choice as more and more developers and real estate groups start to add fractional ownership options to their product offering.
Leisure property investors are becoming spoilt for choice as more and more developers and real estate groups start to add fractional ownership options to their product offering.
Resort developer Pinnacle Point Holdings (PPH) is the latest player to enter the market.
The group now offers fractional opportunities at its flagship Pinnacle Point Beach and Golf Resort near Mossel Bay on the Garden Route. PPH is also expected to launch fractional ownership options later this year at its new Seychelles golf and resort development, the R9,2 bn Ile Aurore Nouvelle.
Dave McGregor, sales and marketing director at PPH, maintains that Pinnacle Point's fractional ownership product will differentiate itself from others by offering investors add-on lifestyle benefits. These include part ownership of a R4m ocean cruiser, use of a helicopter at special rates, free golf for five years (during allocated weeks) and optional use of a chauffeur-driven car at preferential rates.
Pinnacle Point has allocated shares in eight fully furnished villas and two penthouses priced between R375k (two bedroom units) and R790k (four bedroom penthouse suites). Buyers will have four weeks usage per annum.
A number of others have also entered the market in recent months, joining the ranks of more established fractional ownership players such as Seeff Properties and Pam Golding Properties. JSE-listed leisure property developer IFA Hotels & Resorts last month launched a fractional offering at its Zimbali Coastal Resort on the north coast of KwaZulu-Natal. Some 18 properties at the new Fairmont Zimbali mixed-use development will be sold on a co-ownership basis.
The Zimbali offering is pitched at a slightly higher price than most other fractional products, which generally vary in price from R200k to R550k. At Zimbali Fairmont, four weeks usage per year in a two bedroom, 340 sq m townhouse cost from R685k, while shares in a four bedroom, 625 sq m home start at R1,3m.
Werner Geyser, co-owner of fractional ownership portal www.fractionalownership.co.za, estimates that in the last year alone 35 new intermediaries have entered the market.
Although no one disputes the obvious cost-savings of going the shared-ownership route instead of the wholly owned one, the jury is still out whether fractional ownership of a leisure property will in the long-term prove to be a better investment than traditional timeshare.
Fractional intermediaries insist that investors should see healthy returns on re-sales, in line with growth recorded in the general housing market, as buyers share in the capital growth of the underlying property. Timeshare, on the other hand, is not touted as an investment as such because you are buying usage as opposed to actual equity, as is the case with fractional ownership. However, it's still early days: the fractional ownership industry will only be able to test this theory once a secondary market has been fully established. - Joan Muller
