Fractional Ownership to Rescue Spanish Property Market?

Fractional property will take over from freehold sales in Europe within five years, according to industry specialists, as poor economic conditions leave its legacy on the world’s mid-range buyer market.

Fractional ownership was already growing in prominence with global buyers before the downturn, according to data from Mintel and the world’s two biggest fractional consultancies, the Ragatz Association and Northcourse Ltd, which revealed that in 2007 the fractional ownership industry was worth US$1.98bn, (20% up on 2006) excluding destination clubs which registered a further $2bn in sales.

In 2008, the market is predicted to be worth $1.2bn alone in the Middle East, with the majority of establish European and Mediterranean markets all recording strong growth in sales figures.

The industry is also taking root in Egypt, with agency Egypt Real signing a new affiliate partnership with consultancy Fractions Abroad, making it, what it claims, the first company to offer fractional ownership in Egypt.

More and more developers are looking to fractional as a way to secure sales in an uncertain future. Brad Lincoln, CEO of fractional consultancy The Best Group, said his company has been approached by an average of two developers per day to help them consider structuring a fractional product, but turn down 85% because there are not enough trained sales people to handle fractional sales, also stating that “fractions do not turn a poor resort into a good one”. “In five years time the only people not buying fractional will be retirees. Fractional is going to take over completely,” he added.

As a result, the new launch RGM Fractional held its inaugural Fractional Awareness Day in London, designed to raise awareness within the industry about fractional ownership and advise those brokers looking to enter the sector.

Speaking about the future of the international property industry, Lincoln suggested that freehold ownership will become a “luxury, with only high-end buyers taking this path” in the future, with fractional ownership, and its lower cost of entry, taking over.

Graeme Grant, MD of Resort Group International, agreed with Lincoln and said, at the awareness day: “Fractions have been successfully marketed in the USA for some 10 years now and will become the major leisure property product in Europe within five years, easily outselling freehold within that period.”

Story from OPP (registration required)

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