The fractional market in Europe has seen a surge in sales as a growing number of companies report strong figures for the end of 2009.
Fractional consultancy The Best Group has reported £2 million worth of sales through 25 transactions across Europe since the start of November.
“What has made completions accelerate is a sense that properties could become more expensive in six months," Best Group CEO Brad Lincoln told OPP. “Part of the driver is people are seeing fractional finance coming through and are expecting prices to be driven up as the world comes out of the economic downturn.”
Other companies reporting improved sales include Portuguese mixed-use developer Pestana, which has seen transactions increase on 2008 and 2007 thanks to its fractional finance. There has also been growth in the top-end market, according to consultancy Kempf International, which has seen sales increase across a number of private residence clubs in Italy.
These successes follow the well-publicised sale of all 43 fractional units at a Seasons Holidays resort in Spain to timeshare owners in November 2009.
“The key to success is in mixed-use resorts,” said Robin Mills, independent consultant and chairman of the Resort Developers’ Organisation (RDO) communications council. “If buyers aren’t comfortable with what you first offer then you can show them something else.”
Split views on fractional
Some developers known more for whole than vacation ownership have seen their experiment with fractional falter, however, with sales instead coming from investors and bargain hunters.
While Taylor Woodrow de Espana has seen whole ownership sales to UK buyers increase over the last three months, it claims to have had no success with its shared ownership programme.
“To be honest, fractional sales have been an absolute fiasco for us,” director general Javier Ballester told OPP. "I have to say that we received very few enquiries, both in our sales offices and in our telesales for fractional, maybe one enquiry for fractional for every one hundred traditional sales.
"We have abandoned completely the idea of selling fractional and we are now concentrating on the traditional way of selling.”
Jerry Cobb, chief executive of consultancy FOC, which was working with Taylor Woodrow, told OPP that fractional had proved difficult to sell in Spain due to the large discounts available on whole ownership properties.
“We were very hopeful about Spain but fractional property has to be comparable and equitable,” he said. “If the premium involved is too much the client won’t bother with it. It will be spoiled by making the comparison with whole ownership.”
Portuguese prospects
Higher prices in Portugal should support fractional sales, but it's been a tough year. “We’re still getting a number of enquiries but conversions have been very quiet in the last year,” said Nikki Dale, sales and marketing manager for Oceanico, which cut prices on its Prestige Residence Club properties for a limited time last autumn. “There are a lot of people out there still not in a position to part with their money.”
While Oceanico was one of Portugal's few developers to offer discounts during the recession, developer Morgan Forbes raised prices of 13th fractional shares for its Ponta do Pargo Resort in Madeira from £15,620 to £17,914 just before Christmas. Anticipating more sales following planning approval for a Nick Faldo-designed 27-hole course, it also believes a low initial payment (£6750) and low stage payments (2,590 euros) will help to close sales.
An extended report on European fractional sales, looking at what has sold, where sales are concentrated and emerging buyer trends, will be featured in the February issue of OPP. Subscribe now to make sure you receive a copy.