MARCH 2011 |www.opp.org.uk WORDS | George Sell


into resort accommodation, whether it be a small stand-alone scheme or, increasingly, part of a mixed-use development which may also include whole ownership and hotel elements. But a buzz is beginning to grow around


the burgeoning urban fractional sector, with developments appearing in major cities around the world. Paris, in particular, seems to be


undergoing something of a mini-boom in fractional ownership, with a growing number of US property professionals developing, refurbishing and selling fractional properties to their countrymen. Why is this urban trend emerging? What are the benefi ts? There are several convincing reasons why city centre fractional investments make good sense. Firstly, urban fractionals can be considered “dual purpose” properties. Whereas resort-based accommodation is used solely for holiday use, properties in major cities which offer “space available” nights as well as allocated days/weeks are also in demand from the business community as pied-a-terres. A businessman staying in New York or London can combine meetings with a


weekend


City centres work M


ost developers considering the fractional ownership sector are generally looking


break, and bring various members of the family to enjoy all the activities a city has to offer.


Secondly, the general logic behind buying a fraction – that you can get access to a more expensive property for less money – applies to an even greater extent to premium city centre apartments which will generally have some of the highest prices per square metre of any property. Thirdly, and perhaps most importantly, urban fractionals override one of the main consumer objections to the shared ownership concept – seasonal demand. A fractional ski chalet or beach resort has a handful of key high season weeks, a couple of “shoulder seasons” and a lot of low season weeks, all to be shared out equally between owners. An urban fractional doesn’t have this


problem – the likes of London, Paris and Barcelona are year-round attractions, which makes successfully devising a usage plan that keeps everybody happy a much easier proposition. From a developer’s point of view, an urban fractional is simpler in terms of build and


specifi cation too. A vast range of on-site amenities is not necessary, as the property has all that the city has


to offer on its doorstep. Rather than grand houses or villas, they tend to be spacious but not extravagantly large apartments. Kitchens are generally provided but are


not a central feature, as most buyers take the opportunity to eat out regularly when in residence. It is the service by which you offer access to all the surrounding cosmopolitan delights which is key. 47 Park Street in London’s Mayfair, for example, has a concierge who will fi nd guests those hard-to-come-by opera


“Buyers of urban fractionals want a more logical way to spend their money, not a cut-price deal”


tickets or book a table at a top restaurant. An interesting aspect of this market


is that as well as iconic developments such as New York’s Phillips Club, the global upmarket hospitality brands have embraced this market. The Ritz-Carlton Destination Club, for instance, has a property in San Francisco which offers an equity-based Home Club membership. Fairmont also has a San Francisco property in its Heritage Place fractional ownership offering. The iconic Palazzo Tornabuoni in Florence is managed by Four Seasons. One obvious benefi t of buying property


in major cities is that they are often safer property investments than outlying regions. Prime central London property, for example, has not felt the cold wind of recession that has chilled the regions, and has seen steady regular price increases year on year. Last month OPP wrote about the investment potential of


DEVELOPER


One of the most noticeable trends in the fractional sector is the proliferation of urban fractionals, as developers and buyers see the logic of shared ownership in the heart of the city centre. What is the attraction and how are they making it work?


George Sell is the editor of Fractional Trade. Visit: www.fractionaltrade.com


fractional property through funds, and it is no coincidence that two of the companies featured, the Hideaways Club and Rocksure have both recently launched funds focused on buying upmarket city centre apartments for shareholders to use, while benefi tting from any upturn in the value of their portfolios. Rocksure says of its Capital Fund: “Such is the kudos of these locations that it is hard for individual investors to buy, let alone afford, property in the prime locations. Investors in the Capital Fund can rely on Rocksure’s experience, leverage and collective fund budget to access not one but ten sophisticated hideaways across Europe negating the need to make the agonizing choice of where to invest and alleviating the risk associated with one-off purchases.” The Hideaways Club City Collection


will initially begin with 10 apartments in cities including New York, London, Paris, Venice, Miami and Prague.


Additional cities to be included in the portfolio will include Moscow, Rio de Janeiro, Bangkok and Sydney, and the fund has an ultimate target of 120 city properties over the next three years, all overseen by a 5-star central concierge service. In keeping with fractional property ownership in general, the buyers of urban fractionals are not looking for a cut-price deal, but a more logical way to send their money. In many cases, they could probably afford the whole ownership equivalent but they see the logic of sharing the costs of an asset that is used infrequently. They also appreciate the convenience of having maintenance and management taken care of, as well as a concierge to organise their dining and leisure while they are at the properties. Look out for more urban fractionals in a city near you.


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