Private Residence Clubs and Luxury Fractional Property
Owners of luxury fractional property buy a share of a single residence, that provides them with a couple of weeks to thirteen weeks of usage a year. The ownership period varies by development and can be expressed as a fraction (eg 1/10, 1/8, or ¼) or as a number of weeks (eg 5, 6 or 12 weeks).
Private Residence Clubs are the upper tier of the luxury fractional market, providing all the services of a five star hotel together with the ownership.
There are hundreds of fractional and Private Residence Club developments located in city, beach, mountain and resort destinations. Use our home directory to search through these locations.
They are sometimes compared to timeshares, although there are several key differences. For instance luxury fractionals are in better locations, are more luxurious and typically larger, providing 2, 3 or 4+ bedrooms. They also offer true, deeded ownership whereas timeshares usually just offer a "right to use."
The Ritz-Carlton Club is rapidly growing its private residence club collection with 11 destinations including locations in California, Florida, Colorado, Hawaii, the Virgin Islands and now The Bahamas. The newest offering in Abaco, The Bahamas will be available for first phase occupancy in December 2008.
Fractional or shared ownership vacation homes are a rapidly growing segment (over 30 percent in 2006) of the real estate market. Fractional real estate sales were about $1.6 Billion in 2006 and are expected to continue to grow over the next several years. Most of these fractional real estate sales may be attributed to resort and niche fractional projects rolled out by large hotel operators, such as Marriott, Four Seasons, Starwood, and Ritz Carlton (resort fractionals).
In theory, the condo-hotel purchase sounds like a solid investment. Pay an amount up front, and get money back monthly when the hotel rents out your unit. Many investors couldnt wait to get into this market. They whole-heartedly believed that their monthly costs would not only be covered, but that they would have money to put back in their pockets.
We did an article on fractional mortgages a year ago, but with the overall economic climate and particularly the changes in the mortgage market, with mortgage lenders generally applying much stricter lending standards, it's time for an update.