City fractionals are chic and convenient – more space than a hotel room, much more private. And most of the urban properties on the market are in highly desirable locations, near the best city shops or historical landmarks.
Unlike ski or beach resorts (city fractionals’ weather-dependent cousins) your shared pad in Paris is there whatever the season, a home-away-from-home for a spot of shopping, visiting friends or a business trip.
Part of The Registry Collection’s portfolio includes city locations www.theregistrycollection.com - it’s one of the biggest names responsible for “branding” the private residence club lifestyle. San Diego, Chicago and San Francisco are some of the most popular US metropolitan locations for city-specific fractionals, as are Cape Town and Sydney.
So could 2012 be the year of the urban fractional? Quoted in Perspective magazine recently, Ioannis Verdelis at fractional consultancy The Best Group, said, “A product with year round appeal always does better in terms of sales. City destinations tend to have this benefit – think London, Paris or New York, where a range of attractions and events make the season “high” all year.”
Preben Vestdam, President of Valhalla Associates, agrees. He advises developers and investors on new fractional developments all over the world – one of the latest is the Baglioni Marrakech, an exquisite boutique hotel with an extra option – fractional ownership of the villas in the hotel’s private grounds.
“Fractional ownership can be an intelligent way of investing into apartment style accommodation without incurring the full cost of the property,” he says, adding that if a high quality hotel management company runs the fractional side of things, “it can be a very compelling product alternative.”
London, Florence, Paris, New York and Dubai are among the geographical “leaders” in the city fractionals arena but there’s still a lot of potential head for this relatively new market.
Fractional property lawyer Andrew Sirkin of Sirkin Fractional, based in Paris and San Francisco, says:
“I believe the urban fractional market is still mostly untapped, and offers huge potential for developers.”
Asked which would be his top picks going forward, he adds, “My top 10 would include some obvious names, but others that may surprise: New York, Paris, London, Buenos Aires, Rio, Miami, Jerusalem, Tel Aviv, San Francisco and Vancouver.”
Like freehold property sales, fractional sales have slipped during the recession. In 2007 they topped $2 billion in the US, according to a report by US fractional experts Ragatz & Associates but sales slid 38% in 2009/10; however, things are starting to improve again. Resorts are reporting steady sales for the timebeing.
City fractionals are popular with American visitors who come to Europe specifically to see a city and soak up its culture during an extended weekend or a week’s stay, for example. London, Paris and Rome are favourites with US visitors – when they’re not escaping to the Tuscan countryside or hitting the golf fairways in Scotland and Ireland, there’s nothing better than a spot of sightseeing and shopping in Paris or London before they fly back to New York and likewise, New York is a popular fractional choice for European owners.
London’s best known private residence club is Marriott’s 47 Park Street, housed in a historic building in five star Mayfair, conveniently close to shopping, theatre, green parks and great restaurants. Apartments at the club are available in multiples of 21 nights, membership extends until 2050 and owners can stay for a couple of nights or longer. The added advantage of owning at 47 Park Street is the opportunity to exchange within Marriott’s global network.
Also in the heart of London is the latest member of The Hideaways Club’s City Collection. A few minutes west of 47 Park Street, Hideaways’ Kensington residence is just steps from Kensington Palace, official London residence of the Duke and Duchess of Cambridge.
Hideaways plans to add around twenty city apartments each year towards its ultimate goal of 120 urban properties. Locations include Miami Beach, New York and Barcelona and Formula One racing driver is a fan – he recently joined British tennis champion Tim Henman in the role of Hideaways ambassador.
Winter sun seekers looking for guaranteed rays may already know IFA Hotels & Resorts’ hotel condos at the Fairmont Palm Jumeirah, Dubai. The programme guarantees a 10% return per annum for the first five years with a guaranteed buy-back premium of 10% after five years and owners can stay at the hotel for up to 30 days a year.
Of course, one major issue for developers of urban fractionals is…space. Andy Sirkin sums up the challenges:
“In major cities, space for development will be limited, the land or building will be costly, and both the entitlement and construction process long, risky and costly.But because urban fractionals are much less seasonal than other types, it’s easier for owners to mentally justify the purchase. As a result, the market for urban fractionals is broader than for beach, ski or golf, and this makes city projects more resistant to economic downturns.”
For more information on fractional property offerings and exchanges, please see:
www.theregistrycollection.com
www.47parkstreet.com
www.thehideawaysclub.com
www.ifahotels.com
Published Date:
Monday, January 16, 2012 1:15 PM