Fractional ownership option being eyed to fuel boom market
Fractional ownership of property and yachts could be a boom for the real estate industry in Phuket, Thailand, it is claimed in a new report.
Shared ownership sales in Phuket were worth $61.2 million in 2008 and despite the global economic downturn are set to perform well again in the last three months of this year, says the report from hospitality consulting firm C9 Hotelworks.
The Phuket Shared Ownership Market Report concludes that the business model is a natural accompaniment to the destination’s tourism industry which is well on the way to recovery into the third quarter of 2009. ‘With a total customer base of 22,498, the developing industry, while still in its early years, is the sleeping giant of the island’s hotel and property market.
The emergence of fractional ownership of properties and yachts is becoming a notable component of the real estate landscape on the island,’ it says.
Currently, the fractional sector in the popular holiday destination has 554 accommodation units, with vacation ownership holding 87% of the market share in the first half of 2009, and fractional sales have increased by 13%, the research indicates.
The yacht market is considered an important potential growth area with $2.8 million in sales turnover despite programs only starting in 2007.
While consumer spending is in retreat and 2009’s revenue will fall short of the previous year, there is a greater emphasis on lower entry points, financing options and an increase in domestic customers. These factors should provide sound performance foundations during difficult times, the analysis continues.
As other sectors of the property market remain flat more developers will be attracted to fractional projects thus increasing supply and eventually leading to a re-sale market, according to Bill Barnett, managing director of C9 Hotelworks. ‘Our expectation is for shared ownership to increase in the next 12 to 24 months,’ he added.
‘At a time of challenging economic conditions leisure travel remains vibrant in Asia,’ the report also says and points out that more regulation is needed for the sector. It offers though to foreign property investors opportunities which might otherwise
limit their investment. Most purchases are done on a leasehold
or shared basis as overseas owners cannot own land.
Indeed, foreign owners make up most of the buyers so far.
Some 80% of buyers are British, French or Scandinavians, the
report says.