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Introduction to the World of Fractionals,for Real Estate Professionals and Real Estate Developers
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A bridge to the Fractional World for Real Estate Professionals and Developers
National Association of Realtors® International Programs
Aida Turbow GRI, CIPS, TRC, CDEi™ June 10 th , 2009
Historical Background of Shared Ownership. What is Fractional? Why Fractional Ownership? Technology and Internet impact. Comparison with Timeshare. How Benefits Buyers, Developers and Real Estate
Professionals. Questions Frequently Asked. References and Resources.
Outline
After this presentation, participants will be able to:
Become cognizance of one of the fastest growing areas of residential real estate
Know the historical background, current trends and emerging opportunities
Have an awareness of the types of shared ownership.
Identify elements which make a fractional development a success for developers, lenders, and real estate professionals.
Summary & Objectives
• Was inspired by the fractional ownership achieved in the aviation industry.
• An article in National Real Estate Investor, traces the concept of fractional ownership, as a way to hold title to real estate, to the 1800’s.
• Developers of ski resorts, in Colorado, started to offer fractional ownership to unrelated individuals in the early 1990’s.
Fractional Ownership
Historical Background of Shared Ownership
Fractional Ownership
We live in a Fractional World!!
What is Fractional?
Aviation: Aircrafts
Marine: Boat Racing, Yachts
Art Collecting
Equestrian
Applications of Fractional Ownership
What is Fractional?
• Real Property:
Applications of Fractional Ownership
Commercial
Second Homes
Vineyards
What is Fractional?
Global Fractional Ownership in Real Property
What is Fractional?
The Answer…
is…
Property Management!!
What is Fractional?
Change over the same period was about 48.9%.
The Growth!!!Shared Ownership Sector
(in billions $)
2004 2007$0
$500
$1,000
$1,500
$2,000
$2,500$2,298
$1,543
Why Fractional Ownership?
Fractional Ownership: A Global Phenomenon
• Projects in each continent
Africa: South AfricaAmericas: Argentina, Belize, Bermuda, Canada, Costa Rica,
Dominican Republic, Jamaica, MexicoAsia: New Zealand and Thailand Europe: Cyprus, France, Italy, Spain and U.K.Middle East:United Arab Emirates
11
Why Fractional Ownership?
Fractional Ownership is one the fastest growing segments in the Second Home/ Luxury Vacation industry. Benefits:
1. Affordability
2. Diversification 3. Sharing of Benefits/Risks and Responsibility
Why Fractional Ownership?
Why Fractional Ownership?
Why Fractional Ownership?
BENEFIT 1
• A new pricing structure for the fractional product is required.
• A true second home ownership model.
Why Fractional Ownership?
Why Fractional Ownership?BENEFIT 1 …CONTINUE
New Marketing Strategy –New Paradigm
• The marketing objectives have changed.• Old traditional marketing methods no longer work• 99% of today’s marketing must be executed
online
• A sustainable and scalable prospect generation is required. Leads and Prospects are GOLDEN
• Prospects need to experience the product.
Why Fractional Ownership?
Why Fractional Ownership?BENEFIT 2: FRACTIONALS INCREASE CONVERSION
FRACTIONAL OWNERS could access WORLDWIDE EXCHANGE BENEFITS.
Why Fractional Ownership?
Why Fractional Ownership?
FRACTIONAL PROSPECTS INCREASE HEADS IN BEDS & REVENUE GENERATED
BY INCREMENTAL AMENITY USE.
BENEFIT 3: REDUCES MARKETING COSTS
Why Fractional Ownership?
New Scalable Sales Approach
• Scalable technology platform
• Concierge service based • Consultative sales approach
• Thorough training process
• Performance management
New Philosophy
• Turn key solution (…from A to Z)
• A long term partnership
• Experienced management team
http://www.e3fs.com/company/e3-team.html
Why Fractional Ownership?
Technology
We Are Becoming a Single Global Information Society
The Internet has exploded the international marketplace
to more than…. One and a 1/2 billion Internet users around the
world.
Technology and Internet impact
Chart from http://www.internetworldstats.com/stats.htm
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Timeshare Fractional Ownership
Holders only have the right to use the facilities.
Owners receive a fractional deed or shares in the corporation that owns the property.
Apportioned in units of time, weeks, and for a specific week of the year.
Annualized as a period of time.i.e. 1/4 fraction = 1/4*52 wks =13 wks
Option to exchange vacation weeks, within the home resorts’ portfolio or through an independent exchange company.
Limited but available.
Comparison of Timeshare to Fractional Ownership
Comparison with Timeshare
Fractional Ownership
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1/2 fraction
50% Ownership50% Responsible for Maintenance and Expenses
Whole Ownership
100% Ownership 100% Responsible for Maintenance and Expenses52 Weeks a Year (property usage)
1/4 fraction
25% Ownership25%
Responsible for Maintenance and Expenses
3/4 fraction
75% Ownership75% Responsible for Maintenance and Expenses
I. Flexibility
II. Location
III. Sensorial Experience
IV. Value
Benefits of Fractional Ownership to Prospective Buyers
How Benefits Buyers, Developers and Real Estate Professionals
Bahía Príncipe Resort & Golf
365 days of sun, beach and peace
Professional golf course Club house and Spa A modern contemporary
architecture concept Mixed use development;
Whole ownership and fractional
6 star concierge service
Courtesy of Grupo Piñero - Bahia Principe, Tulum - Mexico
http://www.e3fs.com/company/e3-team.html
www.BahiaPrincipe-RE.com
How Benefits Buyers, Developers and Real Estate Professionals
Introducing The Registry Collection®
The Registry Collection® exchange program represents luxury leisure travel at its finest.
Courtesy of Borrego Ranch – Montesoro - California
How Benefits Buyers, Developers and Real Estate Professionals
Questions Frequently Asked
Exchange Programs for Fractional Ownership and Destination Clubs http://www.preferredresidences.com/index.html http://www.destinationclub.com/home.php http://www.theregistrycollection.com/
Fractional News http://www.quintessentiallyestates.com/ http://www.homesoverseas.co.uk/ http://www.hvs.com/ http://www.fractionallife.com/ http://www.opp.org.uk/index.asp http://www.fractionallife.com/fractional_boats_yachts_listings.asp http://www.fractionaljetownership.com/ http://www.fractionallife.com/fractional_private_clubs.asp
Fractional Ownership Resources
References and Resources
Fractional Ownership Resources
Outstanding Destinations http://www.castellodicasole.com http://www.theorchardatcarneros.com/orchard/ http://www.golfingfractions.com/ http://www.aquapura-villas.com/ezine-eng/index.html http://www.bahiaprincipe-re.com/ http://www.lasolas-foundersclub.com/
World Class Consultants http://www.ragatzassociates.com/ http://www.timbersresorts.com/fractional-r http://www.fractional.net/ http://www.fractionalownership.co.za/consult.php http://www.e3fs.com/company/e3-team.html
References and Resources
Special Collaborations for this presentation
Research materials: Jorge Cantero, GRI, CIPS, TRC
and
For more information or a copy of this Presentation please contact: [email protected] or [email protected]
Thank You!Obrigado …
Gracias!谢谢 danke
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