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Fractional Ownership News
Increase in the bank lending rate boosts interest in fractional ownershipDate: 28/09/2009
Article source: Property Magazine
The increase in the interest rate is definitely boosting interest in fractional ownership, with more and more people wanting to find out how to sell their properties on a fractional scheme or how to buy fractional ownership. So says Dirk Wilson, Co-founder of fractionalownership.co.za and member of the South African Association of Fractional Intermediaries (SAAFI) Working Committee.
“Take a closer look at the impact of the interest rate increases. Say someone bought a holiday house in a resort for R1.2m in August 2007, now it is March 2008 and they are paying around R15500 per month for it – but when they bought it they were paying R13200. That’s over R2000 a month that is just lost, or R24,000 a year – and they still have to pay for the upkeep and maintenance of that property. People are now really feeling the impact in terms of both their primary residence and their holiday home.
“More people are now looking at selling their holiday homes to release equity – but they want to maintain the lifestyle.
“The interest rate is certainly making fractional the more sensible option at this stage. It is also creating an influx of individuals and developers who want to fractionalise their properties – from homes and resorts to guest houses and farms - and keep a share of them. For this reason fractionalownership.co.za has taken the initiative and set up one-day workshops on the ins and outs of fractional ownership. We are being inundated by people wanting to fractionalize their homes; a lot of guys are thinking ‘I’ve got this holiday home sitting here, with interest rates peaking - why don’t I sell it on fractional?’. However, once that property is sold as fractional, it is the long-term post-sales management which is the key to success. People don’t realize that they are in it for life. They now have a responsibility to their shareholders to ensure that they are happy for the duration of the relationship – and it is a lifetime investment.”
The workshop aims to explain to interested parties what they are in for, what fractional ownership is, about industry regulators, pros and cons, who the players are, and legal and financial aspects. The first one (held in Cape Town on 14 March) was booked to capacity. Says Wilson: “We are now taking bookings for the next workshop, which will also be held in Cape Town, on 17 April. Numbers are limited to 25 per workshop so that it can be interactive, and early booking is advised. fractionalownership.co.za also plans to hold breakaway workshops focusing on specific aspects of fractional ownership, e.g. legal, sales, marketing and so on.
“We would encourage those people looking to go into fractional ownership to attend the workshop and to speak with SAAFI to ensure that they have all of their ducks in a row, in order to protect the general public and consumers.”
Wilson says that fractional ownership is becoming very popular in Gauteng, where typically people buy within a 5-hour drive of where they live. “Mozambique is really popular right now, and there is a great trend towards people buying resort brands. Pinnacle Point, Zebula, Zimbali, Pecanwood, San Lameer and Cape Town are the leading resorts being sold at the moment.”