FEBRUARY 2011 |
www.opp.org.uk
INVESTMENTS SHAREDOwnership | 53
are other advantages to investing, in addition to the freedom of not being tied to one property. The fact that funds are spread across properties and countries provides security in the event of a fi re, or civil unrest, for example. Bettany said: “Our funds are very geographically diversifi ed, and diversifi ed across currencies too. But the main point is that it’s a liquid investment – we’re a liquid fund to the extent that we’ve got new members coming in. If you measure that against trying to sell your property in Spain or the Algarve these days – it’s not liquid.” He added that the maintenance is completely covered by the service charge. “It’s a hassle and it’s expensive – you might only be using the property three of four weeks a year, but you’ve got this continual need to get the pool man or the plumbing guys in. ‘Hassle-free’ is a big selling point for both Rocksure and the Hideaways Club. Bettany said: “When you go to a property for the fi rst time you might not be aware of where to go. The concierge holds the hands of the members – there’s a central concierge who arranges the itinerary before you go, and then the local staff take over. For example, in Phuket we’ve got a live-in staff of 4 people plus a driver, and they’ll pick up and arrange everything. The holiday can start from day one.”
Rogers said: “It answers all the negatives – it’s a property investment, and they’ll get their annual income in the form of the use of the houses, which are tax free of course. It’s also got a very low risk profi le, because we don’t borrow to buy the properties.” Both companies are keen to stress that this is as much an investment as it is a lifestyle purchase. Bettany said: “Not only do we choose our destinations based on a macroeconomic perception of what would be a good investment for the fund, but also from a top-down view of talking to our members and getting their feedback on jurisdictions they actually want.” He added that the company is able to get good deals on properties because it buys in bulk and can have multiple properties in one destination. “Because we’re cash buyers, we can give very cheeky offers to bring the property into the portfolio at an undervalued price.
Top of the range | interiors for top of the market investors who don’t need to worry about getting a mortgage when buying in
We are also willing to buy off-plan so we can tailor the properties to what our members want, and get that discount too.” This strategy appears to be working
well. Rogers said: “The properties in our fi rst two funds have made capital gains of 30%, although this can be partly attributed to the movements of the currency markets.” Bettany said: “Our share price has gone up from £190k to £235k based on the yearly audit of our portfolio.” Flexibility is key to this offering. Having paid a substantial amount for
through rent to third parties, and Rocksure currently rents out its properties for up to 9 weeks a year in the off-season, with the proceeds going straight back into the fund. Web booking systems for members help allocate the properties fairly. At the moment, these funds are very
much targeted towards the high end of the market, with wealthy cash buyers making up the majority of investors. Rogers said: “Our buyers are at the top of the market – normal people who’ve had a successful career and have resisted the temptation to buy a second
“If you roll the clock forward, in 20 years it will be completely different. For my kids and their kids, when they make a pile of money, it won’t even cross their minds to buy a whole house in another country – it’s completely mad.”
fund membership; owners will expect a high level of availability.
The properties in the Hideaways
Club’s fi rst fund have an occupancy rate of between 30 and 40%, which is achieved by keeping the ratio of members to properties at 6 to 1, the lowest in the industry according to Bettany. Rocksure has taken a different approach – their latest fund will have 17 members per property when complete, although members will be allowed to use their entitlement across all of the company’s products. Spare capacity can be used to earn money for shareholders
home. These are cash buyers, they don’t borrow to invest.”
Bettany expects the buyer profi le
to change, but not much. He said: “What we’re seeing is the early adopters, which generally tend to be the wealthier people. As we grow, we’ll see the demographic of our core members change.” However, he added: “I don’t think
we’ll be going much lower than the new fund (shares start at £65,000 for a half unit in the City Collection). It’s very diffi cult to have a premium product and go much lower than that – we want to
safeguard the exclusivity of what we’re trying to achieve here. I don’t envisage any way in which we can go down to a lower level.”
Few companies have entered the shared ownership market to compete with Rocksure and the Hideaways Club. Rogers attributes this to the recession. He said: “We have a strong link to the economy and the confi dence of the private investor. The Rocksure formula only came onto the market in 2006, so there are lots of high net worth people who don’t know about it yet.” But, despite the current slowdown, it seems likely that shared ownership funds will become an established feature of the overseas property landscape as the economy recovers. There will be opportunities for developers to tailor properties for fund ownership, and opportunities for agents to market and sell units in funds. 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 effect their positions.” “Instead, agents ought to think: How can I get to grips with this new product, and how can I make some money out of it?”
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