Fractional ownership can be defined as shared ownership and shared usage of professionally managed leisure use asset such as a luxury holiday home, villa, lodge, boat or private jet. As the asset is owned by more than one individual, this means your capital investment; risk and ongoing costs are drastically reduced.
Many people around the world can simply no longer justify 100% ownership of a holiday home, either because it sits unused for the majority of the year, or the rising costs associated with whole ownership amount to a small fortune. Perhaps overseeing the holiday rentals becomes something close to a nightmare for you. Sound familiar?
Fractional property ownership is a convenient and cost effective way of owning and using one or more professionally managed luxury holiday homes, either for leisure or corporate use. Your Fractional property shares are directly underpinned by the market value of the property, making fractional ownership a unique and alternative between 100% ownership and non equity ‘use of time’ only products.
There are some exciting and flexible fractional home ownership and private residence club models available globally, each offering shared ownership and shared usage of one or more luxury holiday homes, hotel suites or resort real estate, with some providing you with instant access to exchange into hundreds of other fractional homes and luxury resorts around the world.
Ownership and usage
‘Most Fractional ownerships offer lifetime ownership with flexible usage, rental and resale options’.
Fractional ownership and private residence club memberships range from quarter share ownership (4 owners, each with 3 months usage per year) right up to 26 owners with 14 days usage per year, with the most popular model in South Africa being 13 owners, each with 28 days usage per year.
Flexibility through global exchanges and rentals
Should your fractional shares be affiliated with a global exchange company then each year you will have the flexibility of booking into your fractional residence or opting to exchange your allocated time into another resort or destination. The added flexibility of experiencing new, luxurious and exciting destinations each year makes fractional property ownership that much more attractive.
If you decide not to book into your residence or opt to exchange then you have a third option which allows you, the owner to rent out your allocated time to someone else, this can either be facilitated through your managing agency or privately, and the rental income (minus fees) is yours to keep.
All aspects of operating and maintaining the fractional properties are managed on behalf of the owners by a professional hospitality management company. This company will oversee the general bills and administration, shareholder usage, cleaning and servicing as well as maintenance.
Should you wish to re-sell your fractional shares you can do so. Fractional shares can also be passed on to family or friends through a simple transfer of shares process.
How the concept of fractional ownership was first introduced.
The fractional ownership concept was commercialised in the United States aviation industry by a business visionary and pioneer by the name of Richard Santulli.
Net Jets (founded in 1964) was created in order to provide business leaders and celebrities with a flexible form of jet ownership and usage that enabled its privileged members to phone in a book an aircraft to be delivered to the closest airport and fly them to wherever they wanted to go, this was aptly named as the fractional Jet plan. Members would purchase flying hours, and these would be used as credits.
In the late 1990’s Fractional ownership played a significant role in revitalizing the aviation manufacturing industry to such an extent that most manufacturers now actively support fractional ownership jet programs. At around the same time the fractional real estate products became popular in the US Rocky Mountains ski resorts. According to the world’s leading fractional ownership research firm Ragatz Associates By 2006 there were over 250 fractional developments in North America alone.
Fractional ownership in South Africa - a new era in holiday home ownership.
In 2005 Fractional ownership started becoming popular in South Africa. South Africans were actively looking for alternative ways of owning luxury holiday homes that were more professionally managed than private syndications, yet offered more ‘bricks and mortar’ ownership and long term investment potential than non equity timesharing programmes.
The recent global economic pressures also forced many people to rethink their financial position and capital risk exposure (particularly regarding luxury assets) this new creative approach towards shared asset ownership which is revolutionizing the way current and future generations will own and use leisure real estate.
To date South Africa has over 100 completed fractional developments with substantial international investment currently underway which will lead to many more exciting fractional interests being released over 2010 and 2011.
Herman - 27/11/2012
Where do I start to register a property as Fractional Title? Who can help me? The property is located in the Garden Route, 5 min from George airport in security estate with splendid ocean views! The property is still being developed, 75% completed on structure, and we expect to finish April 2013, but would like to start marketing the property now.
Nayaz - 09/09/2012
Dear Melusi, I have a fractional ownership for a resort in Mauritius. If this could be of interest to you or anyone here please do contact me annaworldpro@gmail.com
Melusi - 06/09/2012
Your comment... hi, i have some money that i would like to invest, who do i contact in order to invest in fractional property?
Melt Calitz - 26/06/2012
I am one of four owners of a holiday home in stilbaai, south africa. The home is currently being rented out on an annual basis. I want to sell my share. What procedure should i follow.
Duke Parker - 22/03/2012
Your comment...Is fractional title of a resort an option in Mozambique?
Admin - 16/03/2012
Hi Henry. We would be interested in finding our more about your project in Zambia, and more than happy to assist you. You are welcome contact me on +27 72 5918582
Erica W - 19/10/2011
Could anyone please give guidance on how to mortgage should one want to invest in fractional ownership? Seems the banks do not offer for this type of lending.. Thanks!
Rob Cuthbertson - 06/09/2011
Your comment...We are currently considering developing a fractional title unit on our game lodge,what are the legal requirements.The section under consideration is sibdivided.
Glenn McLean - Wilson - 25/08/2011
HI, We have 4 families looking to buy 20 Hectares and divvy it up amongst ourselves. We are experiencing issues with sub dividing. Can we establish this under fractional ownership or would it be more of a syndicate and if so where can I get more info. We envisage each building homes on the property and fencing designated agreed areas off per family. This we will do in agreement before hand and then set up a managing body to control the situation.
tebogo - 10/08/2011
i need information on how to be an owner in fractional ownership
tebogo - 10/08/2011
hi where can i get more information regarding fractional ownership
Emlyn Brown - 28/07/2011
Hi there, For some years now I have been in development with a floating marina house boat concept. To raise the finances who would I need to work through ( and with) in order to go about it the right way. Equally, if an owner has no wish to take a vacation for his time allocated period, can the managing company rent that time period out on behalf of the owner with a commission fee. Thanks Emlyn
Zinta Wepener - 25/07/2011
I am not familiar with fractional ownership. I am a co-owner of a house in a golf estate. I want to know what is covered under our levies - is that only general maintenance such as cleaning services, or does it include replacement of broken or damaged cutlery, linen, replacements of curtains and blinds and the service of the golf cart? According to me the general maintenace of the place, such as damps, painting, cleaning etc. should be covered. Are the interior also covered or should it be replaced and the cost be for the owner's expenses? What about outstanding levies not paid by other shareholders - for who's expenses is the legal fees and who should be responsible for the outstanding levies
Annabella Coetzee - 31/05/2011
I own a house in Gordon's Bay with a 50% share. Does fractional ownership apply here. If I wish to sell my sharel to a buyer ( other than my cousin) can I do it freely?
Dirk Wilson | fractionalownership.co.za - 18/04/2011
ARE YOU A FRACTIONAL OWNER? If so, please wont you help take part in a industry survey facilitated by Grant Thornton and VOASA. have your say, and it will only take a few moments of your time. here is the link: http://www.esurveyspro.com/Survey.aspx?id=60e57e87-ad1a-4725-911c-89dfbea4792a&cid=8fea044f-5714-4c5e-9232-4596f53ec7d8 Copy the link above into your browser.
Dirk Wilson | fractionalownership.co.za - 18/04/2011
Hi Vuyo. I would suggest you seek a specialised legal opinion on how you go about the sub-division of your farm, as this would be more of joint ownership project of agricultural land, and will attract a variety of legislative parameters. I hope you have success with your project
vuyo - 14/04/2011
dear Sirs, we have a farm in the eastern free state,considering what and how to go about offering co-ownership to about 20 or more families..since we own the farm is it possible to say those interested put money in to join to become co-owners and what does sa law say with regards to this? would appreciate your insight in to such matters and hopefully more if you can assist. Kind Regards Vuyo
Dirk Wilson | Fractionalownership.co.za - 09/03/2011
Hi Gary. Thanks for taking your time to write to us. Firstly, I cannot stress enough the importance of correct structuring of any shared ownership project. Its a complex process, that if done correctly, will benefit both the buyer and developer. I can recommend the upcoming VOASA 2011 conference in Durban for great insight into the world of Shared Ownership. Visit www.voasaconference.co.za Regards Dirk
Gary - 28/02/2011
Hi Dirk.... we have an upmarket Private Lodge in Sodwana Bay which we are wanting to Fractionalise or syndicate, when is your next conference as i would like to get to know more about this type of investment opprtunity
Dirk Wilson - 03/01/2011
HI magalaweng. You can jointly purchase a fractional share with other people. This will need to be disclosed to the seller upon purchase, and all parties will need to adhere to the rules and regulations applies to ownership of the share.
magalaweng - 12/12/2010
would it be possible for my siblings and me to together buy fractional ownership of a property or we can only do it as individuals?
Dirk Wilson | fractionalownership.co.za - 01/12/2010
Hi Henry. Good to hear that you are considering shared or 'fractional' ownership as part of your development in Zambia. We have just completed a series of 3 conferences in Sandton, Durban and Cape Town specifically to help new entrants into the market with best practice and structuring concepts. It would have been the perfect event for you to attend. with regards to your question about promoting your resort. Our websites are used by many people looking for information on 'what and where' to buy shared ownership in Africa and abroad - so yes we can definitely assist you with promoting your resort through this website as well as www.holidayhomesportal.com website. Please find me contact details on our contact us page. Kind Regards Dirk
Rian Zietsman - 01/12/2010
Thanks, that is very insightful.
Dirk Wilson | fractionalownership.co.za - 01/12/2010
Hi John. Yes you can co-own real estate with other people (not necessarily related) and this would be viewed as syndication. You can structure the ownership and usage of the asset in various entities, such as a company / trust or other. Its best you seek legal advice before you commit to the deal. Regards Dirk
John Siddall - 30/11/2010
To whom it may concern, Can fractional ownership be done privately between family members ona basis which conforms to the fractioanl principles etc. In other words could me and my sisters buy somewhere even where it is not know as a "fractional estate/development" and then run it as a shared form of business enterprise to be run by a trustee body. Or does this have to be done formally through an institution such as your's. Thank you Hi John. What you are referring to would be 'syndication', although both a very similar in concept, Fractional should be viewed as a more professionally managed form of syndication, typically involving multiple 5 properties and generally serviced by a hotel operator, facilitating check-in, house cleaning etc... You can indeed run your own syndication, and we would recommend you seek correct legal advice before you sell off your property on a shared ownership basis.
Henry Sichembe - 21/11/2010
Your comment... Great concept. We've just completed a business plan for the establishment of a private game ranch & nature reserve in a 5,000 ha area up in northern Zambia. Could you be of help to assist us by identifying would be interested parties to own a portion of Zambia by way of fractional ownership? Kind regards
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