The 3rd Annual Fractional Ownership Conference was held in Cape Town recently, attended by over 130 key delegates from the vacation ownership sectors. Dirk Wilson, co-founder of fractionalownership.co.za and organiser of the conference, said he was pleased to see the optimism shown by the major payers “who are firmly focused on the light at the end of the tunnel, with an upturn in the property market foreseen for the second quarter of 2009″. Wilson presented interesting information at the conference, quantifying the current status of the fractional ownership market in Southern Africa.
Fractional ownership in South Africa is generally perceived to be exclusively applied to luxury vacation residences; however, the concept is now also being applied to luxury leisure use assets such as helicopters, private planes and boats. Says Wilson: “One company in Johannesburg has sold 6 private planes by fractional ownership and is busy selling their first helicopter; a company based out of Cape Town has recently completed the sale of a R15m luxury cruiser on fractional and is now moving onto their second boat. We have been talking to a company based out of KwaZulu-Natal (KZN) offering super-cars on a fractional ownership and shared usage structure.”
He outlined the number of active players selling assets on fractional ownership in the South African market as follows: vacation residences - 34 companies with 120 + different residences to choose from in over 41 destinations throughout Southern Africa; 1 company with 7 aviation products; 2 companies with 2 top-end boats, and one company putting final touches to their super-car club.
Wilson says the number of fractional ownership companies involved in the residential sector has dropped dramatically in the last 6 months. “There were 64 companies active in the residential market 6 months ago, which has dropped to 34 today. This is a good thing, because it was evident that there was something of a ‘gold rush’ to market. Droves of developers and agents had the perception that a residence that was not selling on the whole ownership market would automatically sell on the fractional market. They could not have been further from reality.
“To operate in the pre- and post-sale fractional market, you will be required to implement management and hospitality support infrastructure for a minimum of 20 years. For the South African market to maintain long-term sustainability and keep its position as the world’s second most established fractional sector (after the USA), it is imperative that new entrants in the market understand what their long-term obligations to their projects are, and are prepared to conduct essential research before they launch a product into the market. For example, after the shares have been sold, how they plan to appoint a management team to service and maintain the asset, as well as support shareholders with the highest levels of service for very long time.”
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