Fractional Ownership

The presentation on how developers could utilize fractional ownership as a complimentary component to end users covered the full spectrum the subject.

The major point selling point of this new tool in the chest for developers was that the average second home buyer in Cyprus, rarely uses their property for more than 34 days per year.

This in itself, leads to an argument that fractional ownership, which allows several investors to join in and share the purchase price and the usage of an asset, could have a place on the real estate showroom in Cyprus.

Fractional Ownership was created out of asset sharing, combining the financial power of several investors or customers considering an outright purchase of a Luxury Jet, with a price tag of 20,000,000 usd.

After considering the required amount of use, many investors were convinced that by investing in a syndicated purchase, or by buying a 1/12th interest in the Jet, they would have exactly what they were looking for, lower costs and flexibility.

Property Developers such a Donald Trump have engineered the concept to properties over the last ten years, and have created demand through a well structured marketing campaign.

Top of the range properties in dream destinations as well as popular urban locations have profited from this down to earth product offering, generating more than 2.6 Billion in sales per year and growing this segment of the industry a handsome 15% higher per year.

Legal structures that provide solid consumer protection such as the employment of trustees has been a favored trend, with many developers opting to place the asset into a company and provide a vehicle to sale the shares to investors which transfers the rights to equity participation to the investor.

Companies that add value to these offerings such as the Registry Collection, a portfolio of lifestyle benefits that add flexibility of usage around the world in superb high end properties have accelerated the sales power of a stand alone development.

While sales and marketing costs are normally double to what a typical whole ownership budget would call for, the yield of the value of the fractional offer exceeds 150% of the normal asset valuation, driving higher overall profits back to the developer.

Fractional Ownership products typically win investor favor when the services for users of the property are well planned, comprehensive and seamless, making checking in to their property and their overall stay, a 5 star experience. The usage plan, which governs reservation and usage rights is another aspect to give careful consideration. Some projects use a rotating calendar, while others create their own reservations systems allowing the use of 3 to 8 weeks per year, rating each week of the year by a points rating to highlight demand and seasonality.