DECEMBER 2011 |
www.opp.org.uk WORDS | George Sell Another string
Everything in life is about balance and, as OPP’s expert fractional columnist George Sell explains, there is an increasingly detailed debate going on at present about how to arrange whole-ownership real estate holdings alongside a growing fractional portfolio. The best way forward could well be to try and equalise the risk and ensure that your clients have as many strings to their bows as possible. Be prepared says George.
T
here has been an interesting debate in the property media over recent weeks about the
potential for fractional ownership and what role it will take in the future alongside whole ownership vacation real estate. Mark Sharp, the chief executive of the Association of International Property Professionals (AIPP), has said in the pages of OPP that he thinks fractional ownership will eventually take its place in the mainstream as whole ownership vacation homes become less common due to the global economic downturn. Speaking to Fractional Trade, Sharp said: “The fractional concept will become more popular and no longer be considered a rarity. It will sit alongside the mainstream of people purchasing individual properties overseas.” “It’s important to realise that fractional can include families and friends that buy properties together, not just those that purchase a time period or annual share of a home for example.” Sharp says that the biggest
hurdle facing fractional ownership is consumer awareness. “There is still some confusion among new or potential buyers that fractional is the new timeshare.”
“Fractional needs to conduct a campaign which clearly differentiates itself from that. It also needs to increase its marketing budget and continue to educate with great examples of happy purchasers and strong products.” Sharp also adds that the process of fractional gaining mainstream acceptance is dependent on the state of the economy, and may take longer than many in the sector might hope. “Five years ago I would have said between 18 to 24 months for fractional to become mainstream,” he says. “But today I think we are talking 24 months plus. Of course, that also relies on a signifi cant
Money | will fl ow if you treat whole and fractional ownership as compatible ideas
itself would surely pay dividends, and it is a subject which always comes up when the fractional sector meets in numbers. It’s a fi ne idea, but it needs someone to get the ball rolling by putting their money where their mouth is, and the reality of the situation is that fractional operators are feeling the pinch as acutely as anyone else in the property industry and beyond. It will be a brave individual or company that does that, so we can’t wait too long. It’s up to us as an industry to spread the word whenever possible. But one area where
sure this situation changes by forming closer relationships? For the developer, having a network of agents selling their product is a no-brainer, taking some of the pressure from their in-house teams and giving them a presence in markets they might otherwise struggle to reach. It’s true that fractional is a more complicated sale than its whole ownership counterpart, and it is vital that any agents who are selling it are extremely well trained. Some agents clearly don’t think that investing in such training is a worthwhile exercise but
marketing campaign and spend, as well as awareness of preceding market and economic conditions.”
I wholeheartedly agree that consumer awareness is the biggest obstacle preventing fractional from fulfi lling its obvious potential. We often fi nd that not only are consumers largely unaware of exactly what the product is, but so are many of the leading property journalists who educate the public via their newspapers and their websites. A generic campaign from the sector’s leading players to market not just their own products but the fractional concept
fractional is missing a trick is educating agents. A Global Edge industry survey earlier this year revealed that fractional property “was the least popular product category with agents selling overseas property”. Ashley Rigg of Global Edge thinks this is because “many agents in our industry see fractional sales as being a similar amount of work but for a smaller commission. Combine this with low consumer awareness which makes the concept a harder sell and you get low sales volumes”.
Surely both fractional developers and agents have a vested interest in making
George Sell is the editor of Fractional Trade. Visit:
www.fractionaltrade.com
that does not preclude them from acting as lead generators and then referring any enquiries to the developer’s in- house sale staff. And from an agent’s perspective, having another string to your bow in this market has got to be an attractive option, and there is no reason why fractional should not sit alongside whole ownership property, with the two options complementing each other.
“Fractional is a more complicated sell than whole ownership, so it’s vital to train agents properly”
If a buyer is unsure whether or not they can afford the whole ownership option, perhaps you should suggest a fractional unit on the same resort … with the option of trading up to whole ownership at a later date?
And what if a buyer has reservations
about looking after the management and maintenance of a property? Fractional ownership takes care of all that. If your buyer does not want to commit to spending all their holiday time in one place by virtue of buying a property there? How about a fractional scheme which is a member of an exchange programme? If your buyer is a busy professional who isn’t sure whether they can justify buying a property when they will only to use it for three weeks a year?....well, you get the picture. Personally I think it’s time that the industry as a whole tried to get past any vaguely adversorial ‘them and us’ attitudes and realise that the fractional and whole ownership options can be compatible with each other.
BUSINESS
Developer profi le
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