Fractional Ownership News

Fractional ownership - why now ?

Date: 28/09/2009
Article source: Remax

In the current economic conditions, with higher interest rates and rising inflation, consumers need to make their money work smarter, particularly from an investment perspective, says Thys Geyser, MD of Pam Golding Fractional Ownership.

"Take for example those who are in the property leisure investment market, who want to be able to make the most of their holidays by investing in property in an ideal vacation location. Traditionally South Africans have invested primarily in second homes or timeshares. However the needs of consumers have evolved, resulting in numerous vacation ownership models and products being developed to accommodate these. Aside from timeshares, other joint vacation ownership products available include destination clubs, syndicates, fractional ownership and private residence clubs," says Geyser.

"There are two fundamental differences between these vacation ownership products ie they are either use- or equity based.

In other words, the investor's motive is predominantly influenced by either a need to use the facilities, or to increase their equity over time. Use-based products such as timeshare and destination clubs are marketed for their 'wow' factor, flexibility and exchange ability, while equity or investment based products such as syndicates, fractional ownerships and private residence clubs are chosen for their ability to appreciate, render a short-term yield and provide an ownership element."

Geyser says although many aspects of joint vacation ownership products are common to all products, such as the fact that they are managed on your behalf or that you only pay for the part you use, the basic difference between them is either the existence or absence of an asset that appreciates over time. In the long term, it's important that investments grow, and not all current joint vacation ownership products provide for this.

He refers to five 'Wall Street' criteria on what to consider when investing:

1. Does the asset have the potential and profile to appreciate?
2. Is the cost of owning the asset less than the cost of renting it?
3. Can the income received from renting out the asset cover the holding cost thereof?
4. Can the asset be disposed of when needed?
5. Can the asset be managed remotely or through someone else?

In every instance the equity or property-based products would answer in the affirmative. Based on the above criteria, it is evident that property-based joint vacation products make good investments. But what makes something like fractional ownership worthwhile?

"It is a sound investment by virtue of the fact that it offers both qualitative and quantitative benefits. Firstly quality time for family bonding and enjoyment, with four weeks of relaxation and enjoyment while management takes care of all hospitality requirements. It's a lifestyle investment, ideal for those who desire a balanced way of life and the need for structured holiday breaks. Then quantitative benefits include financial returns in terms of use value, the investment has two short-term financial returns, the potential rental income during the unused time - which in turn covers the cost of the time used, and capital preservation and appreciation. Fractional ownership is the ownership of prime vacation real estate, so as the prime property appreciates, so too will the fraction's prices. Also important is the fact that Pam Golding fractionals are managed on your behalf and handled in such a way they will appreciate in value," says Geyser.

"It's easy to see why property or equity-based investments are definitely worth considering when looking at joint vacation ownership. Fractions are affordable, focus on family time and a quality lifestyle, provide market-related, short-term returns, appreciate in value and are professionally managed on your behalf."

Pam Golding Fractional Ownership currently offer a number of affordable, resort-based opportunities priced from R230 000 to R475 000 in prime locations which include Langebaan Golf and Country Estate in the Western Cape (R230 000 pre-launch offer); San Lameer in KwaZulu-Natal (R260 000); Pinnacle Point Golf and Beach Resort on the Garden Route (R345 000); and Hermanus Golf Estate in the Western Cape (R475 000).

For further information or to attend one of Pam Golding Fractional Ownership's free golf days contact Thys Geyser on 082 811 3812, email thys.geyser@pamgolding.co.za or RSVP to fractionals@pamgolding.co.za. The golf days will be held at Elements Private Golf Reserve in the Waterberg, Hermanus Golf Estate (Fernkloof) and Pinnacle Point Golf & Beach Resort.