14 | INDUSTRY Fractional news Direct debate
The planned EU Timeshare Directive has sparked intense debate across the industry. We asked experts for their thoughts on what the directive will mean for the fractional industry. Add your voice by getting in touch with us at amit. katwala@richmondgreengroup. com, or calling +44 208 734 3973.
“With the European Timeshare Directive due to be implemented, it’s likely only committed fractional developers will enter the marketplace. Those bona fi de fractional real estate operators who have invested in eff ective fractional legal documentation will achieve successful sales.” Piers Brown – Fractional Life
“We believe that the regulation of our industry will bring some consistency and quality in the market, which will help improve consumer confi dence. Moreover, the current regulations provide an opportunity for developers to structure products that will provide them with access to incredibly cheap fi nance. This is an exciting time for our industry.” Brad Lincoln, CEO, The Best Group
“There is a serious problem looming. The new directive will have a massive impact on the fractional sector. A lot of developers won’t want to take all of the upfront risk. But, the new regulations have been designed to protect consumers buying into fractional schemes of course, but I have long maintained that timeshare is a type of fractional, but fractional is not necessarily a type of timeshare. Both approaches give owners the right to use a property for a share of the year.” Peter Esders, Chebsey & Co
“It will have an eff ect and will stop some schemes in their tracks … but I don’t think that it will stop serious and reputable developers from investing in a proper fractional project. In fact, over time, it could boost the sector. It will make things clearer in my view, and make the fractional sector feel more consumer friendly. It will make schemes more uniform and bring in concepts such as standard disclosure.” Eric Gummers, International property lawyer
INDUSTRY By Geoff Hadwick
THE fractional market will become much more serious this year, with only committed developers investing properly, according to Fractional Life. Speaking to OPP, chief executive Piers Brown said that the new EU timeshare directive will push out those who are “unsure” about the fractional sector and speed up the migration away from old- fashioned timeshare products. Fractional Life has made a number of
key predictions for the year ahead. Brown expects the industry to get much more serious in 2011. He said: “Developers unsure of their product or not totally committed to effective fractional sales will fail, withdrawing from the market. With the European Timeshare Directive due to be implemented on February 23 2011, it’s likely only committed fractional developers will enter the marketplace. Those who have invested in effective fractional legal documentation will achieve successful sales.” Brown also emphasised the future importance of social media. “Consumers will talk more about themselves than ever before. Social networks allow you to know what’s happening in your fractional owners’ lives (legally). Treat them with respect and offer random acts of kindness - your referral rate will
www.opp.org.uk | FEBRUARY 2011 Fractional life to get serious
Sacks of potential | Only serious developers will make fractional sales this year
increase and people will talk favourably about your development, fuelling more potential sales. Caution: Get it wrong and it will take years to put right.” Truly understanding fractional buyers
will be key as well. “With excess property and information available to shrewd buyers the developer sales team needs to truly understand fractional buyer motives. Fractional owners look for convenience and collecting as many experiences as possible, the possibility of perpetual upgrades to the latest and greatest and access to otherwise out- of-reach luxuries. We foresee more ‘planned spontaneity’ initiatives and a fl exible approach to pricing to close the sale. People will continue to be reluctant to commit to discretionary or big ticket items. Temporary choices, renting and
sharing more with friends will become more popular – this is good news for fractional ownership.” Brown also predicted the fractional
model to spread to different kinds of resorts. He said: “The boutique hotel and hospitality sector will follow the Baglioni and Yoo brands, taking more of an active role in the content of a fractional ownership resort.” He expects shared ownership funds to become more popular, as well as more ski-fractionals, and fractional lodges closer to home. He said: “With the continued popularity of the UK ‘staycation’, we’ve witnessed a boom in the fractional lodge sector. We can see this growing as the consumer looks for a cost effective holiday home option.”
Agents urged to embrace funds
THE director of a shared ownership fund has called on estate agents to get to grips with new products and take the opportunity to make some money. David Rogers is one of the
founding directors of Rocksure Property, which recently launched the Capital Fund, a portfolio of European city centre homes which investors can buy into in exchange for 14 nights of use a year. Speaking exclusively to OPP,
Rogers said: “Most estate agents still regard themselves as developers and sellers of whole homes – they find it difficult to get their heads around the idea of developing, marketing, promoting and selling part of a
house. They think their job is to sell a whole house, and they don’t want to complicate their lives and affect their positions.” He added: “I would love agents to
understand that in 20 years it will be completely different – when my kids and their kids make a pile of money, it won’t even cross their minds to
buy a whole property in another country – it’s completely mad. Agents ought to think: “How can I get to grips with this new product, and how can I make some money out of it?”. Rocksure have just announced
the acquisition of the first property in their Capital fund, a luxury apartment in Paris. Investors can buy a full unit in
the fund for €115,000 euros, which entitles them to 14 nights a year at any property in the fund for its 10 year lifespan. For more information on shared
Luxury stays | in cities like Paris or Berlin
ownership funds, turn to page 52 for OPP’s special report.
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