Fractional Ownersip?

[Peter Mitry]

What do members think of this new way of owning property? This is where people get together to jointly purchase either a villa or apartment for two to three months each. Each persons period of ownership then rotates each year so that everyone gets to enjoy the different seasons.

This is NOT time share where the promoters charge ever increasing management fees and you never actually own the free hold. Here a group of owners own specific months and share the costs equally. As a group you are always in control and are free to sell your share at any time.

This method of ownership would be perfect for Egypt with an all year round season and very appealing in the high end resorts like El Gouna or Sahl Hasheesh.

It would be great to get some feedback.

 

[NeilHollingsworth]

Peter, here is a link to a company i work with in the Uk for Fractional Ownership, it might help to explain the mechanics of it better

Waters edge Cotswolds - Luxury Property for Sale

 

[HORIZON]

Well even if investors welcome this idea, it will be difficult to come through to developers with this one.

Personally I would go for it only in case I know the people who are buying the rest of the fractions, because it will come to arranging the time to stay, as well as the way how the property is treated while you are not around. So it is just for pure investing I would say...

 

[Georgina]

Sounds an interesting idea. I think a lot of purchasers are either buying to rent out or want to keep their property just for their own use and for friends and family. This would be a much more cost effective way if you were not using your property much and didn't like the idea of strangers renting it and worrying about someone who has no respect for your property. There are some horrible stories about how some people abuse properties during rental.

If all four buyers agreed it would be simpler i.e. the property can be rented out via an agency or just used for all four owners friends and family?

It would be a good way to purchase a front line beach location in a more expensive location that would otherwise be financially out of reach.

 

[Peter Mitry]

The Mechanics of Fractional

Sounds an interesting idea. I think a lot of purchasers are either buying to rent out or want to keep their property just for their own use and for friends and family. This would be a much more cost effective way if you were not using your property much and didn't like the idea of strangers renting it and worrying about someone who has no respect for your property. There are some horrible stories about how some people abuse properties during rental.

If all four buyers agreed it would be simpler i.e. the property can be rented out via an agency or just used for all four owners friends and family?

It would be a good way to purchase a front line beach location in a more expensive location that would otherwise be financially out of reach.

How this works is that a Developer will nominate a number of properties to be sold in this way; this would normally be the more expensive units in the best locations but of course it could be anywhere. When potential owners express interest the Developer will establish the property concerned as a limited liability company and will sell shares, depending on how many owners are envisaged.

In most cases this will be four shares of 25% each so a potential buyer could buy one or more shares. Usage of the apartment will be on a revolving calender so that all owners get equal shares of the more popular times throughout the year.

Owners can either use their time or rent to friends and family as they wish.

If an owner wishes to sell, the share may be offered to the other owners or offered to new buyers at the going rate.

The costs of maintaining the apartment/property will be agreed between the owners and shared equally.

 

[Organics1]

Fractional ownership = a slow property market

 

[ERG Experts]

Fractional Ownership

Dear Members,

I am conducting a bit of market research and was hoping for some help. What are your opinions, as buyers or investors, on fractional ownership?

1. Is it something you would consider? If so why, if not why not?
2. If you were not interested in buying under fractional ownership, would it put you off a resort if other units in the resort were marketed in this way?

Any help you could give us on this subject or any comments you could offer would be of great help. Fractional Ownership is still very new to Egypt, and due to the extensive administrative work I would like to know if it would be worth the extra efforts or if it has the stigma attached to it as timeshare and would actually put people off rather than attract them!

Thanks in advance for your help

 

[Lysos]

For: If you can't afford the full price of a property it's an option, but

Against: The only fair way to allocate weeks/months is on a rolling timetable e.g you might get June this year, then July next et al. So, there will be times when you can't/ won't want to use your allocation (the practicalities and expense of trying to sub let such periods make it non cost effective). It will be virtually impossible to resell.

Bottom line is the only winners with fractional ownership are developers/vendors. Also, there is such a glut of unsold new build & resale properties in all holiday areas that a determined buyer can find a 'whole' property for the price of a 'fraction'.

According to well iformed, well written articles in Investor's Chronicle recently, in Bulgaria, for example, desperate sellers are having to accept 15% of what they originally paid. The same will happen in Egypt.

 

[queenie40something]

Hi ERG I have merged your thread into this existing one about Fractional Ownership

Regards

 

[ERG Experts]

Hi ERG I have merged your thread into this existing one about Fractional Ownership

Regards

Thank you, hadn't realised there was already some info about it here.

 

[Alan Cockayne]

Dear Members,

1. Is fractional something you would consider? If so why, if not why not?
2. If you were not interested in buying under fractional ownership, would it put you off a resort if other units in the resort were marketed in this way?

Any help you could give us on this subject or any comments you could offer would be of great help. Fractional Ownership is still very new to Egypt, and due to the extensive administrative work I would like to know if it would be worth the extra efforts or if it has the stigma attached to it as timeshare and would actually put people off rather than attract them!

Although not new, this form of multi-ownership is a great idea especially if a private resort management company could be formed by each to run their scheme. Getting everone involved is the best scenario. If left to individuals or the developers, it would not work. The resort then splits into fractions, some owners not being motivated.

Investment consortiums do this already and organise the rentals and resales, generating income or aftersales profit for each fractional owner. The resorts find that their owners and guests are genuinely accepted, adding to the ambiance and value. Each property would be well maintained similar to a hotel rental scheme.

So long as these managed groups are well organised and join in rather than controlling the resorts, I see lots of advantages. Maintenance and security and rubbish clearance to name a few.

Alan - Coralife-Style Consultants.