However the question still remains, why does this make so much sense, what
are people looking for and more importantly what are people buying into, can
someone please explain if this is just clever marketers selling timeshare?
Well let’s start from the top, why does this make so much sense? If you own
a holiday home outright you probably only get to utilize the property for 4
or 5 full weeks during the course of the year, you then probably find
yourself spending the first few days of your hard earned ‘relaxing time’
cutting the lawn, cleaning the cupboards & linen and generally getting the
house ready for all to enjoy.

With a fractional ownership you purchase a share in a managed company that
owns a luxury property, the benefit of owning your share in this company &
property usually entitles you to exclusive usage in the actual property for
4 weeks per year, so in essence you are still investing in property, and you
are only purchasing the weeks you actually need, all this at a portion of
the cost you would have spent if you purchased the very same property
outright.

There are also additional benefits by renting out the weeks you don’t use,
why not use this rental income to offset your portion of the yearly levy
contribution ? The various costs of managing, maintaining & servicing the
property are equally divided amongst the various shareholders in the
property, in comparison this drastically reduces the monthly cash outlay you
would spent if you were to pick up the entire tab for maintaining the
property through whole ownership.

To put it all in perspective, these days you will be lucky to find a luxury
2 bedroom apartment on the beach for under 1.5 million, then once you have
kitted out the property you may well be in for close to 1.6 million, this
excludes the monthly expenses such as the resort levy, DSTV, security &
insurances, this could quickly equate to over R 700 per month (excluding the
golf membership & cleaning). On a good fractional scheme you could buy a
share in the very same property for under R 300,000 and enjoy the benefit of
4 weeks exclusive access during the course of the year, and better still
your levy should come in under R 600 per month, who knows you might even get
a daily cleaning service, Plasma screen, PVR decoder, 2 mountain bikes, a
golf cart plus access to the resort course, all for included in the average
R 600 monthly due.

Now we understand how this whole thing works, what are people looking for in
a fractional investment and where are they buying into these properties? If
you take into consideration that most fractional ownership schemes entitle
you 1 week exclusive access to the property 4 times a year, then you would
probably want to get there in a reasonable time, especially if you have the
fill car with impatient kids! Thus the majority of investors are looking for
a fractional property within 5 hours travel time, most of the guys in
Gauteng do this daily to work & back, who wouldn’t want to get away for a
hassle free week every few months if you had to do that every day?

According to Dirk Wilson of fractionalownership.co.za “The majority of
fractional enquiries & transactions taking place in South Africa are from
the Gauteng area. This is not surprising when over 40 % of our website
visitors are from this region; the market is seeking a hassle free luxury
property investment that is fairly easy to get to.

The most popular choices are secure gated resorts that are serviced &
managed to a high standard; these properties tend to be situated in high
growth areas such as golf resorts, wine & game farms as well as sought after
costal resorts with a mix golf & beach access”.

Currently in South Africa many of the resort brands such as Zimbali,
Pinnacle Point, and Arabella are predominant in the requests for fractional
property, this is due to the on-site amenities such as golf, children’s
facilities, health spa’s & beach access, and such amenities are becoming a
prerequisite amongst families. The DINK’s (Dual Income No Kids) crowd are
looking at luxury serviced apartments in urban areas such as the Emperor in
Sandton, Horizon bay in Blouberg, Dockside & Cape Royale in Cape Town CBD.
Corporate South Africa is also showing allot of interest fractional
property, these can be used for business trips as well as staff incentives
and hospitality events.

When the concept of fractional ownership first is introduced, many at
initially comment ‘Oh it’s like timeshare right ?’ the answer is yes, the
usage rights are similar, however with timeshare you are purchasing just
that, a ‘definable use of time’ in a resort that is linked to an exchange
program. The clear difference between timeshare & fractional ownership
becomes apparent when you consider that with fractional ownership you
actually own a share in a property, the usage is one of the benefits on your
investment, your share can be passed on to your family to enjoy, you can
sell your share with a simple sales of shares agreement, the cherry on the
top is that you over the medium to long term you are likely to see a fair
return on your investment capital as well due to the fractional properties
being situated in high growth areas.