Fractional Ownership, Luxury Shared Vacation Ownership, Moving in Right Direction

Fractional Ownership trending up once again
Fractional Ownership trending up once again

The Ragatz Associates‘ 12th annual in-depth look at North America’s top real estate projects and clubs showed a positive upturn in fractional ownership and luxury shared vacation ownership. The Ragatz report, “The Shared Ownership Resort Real Estate Industry in North America,” looked at 305 fractional ownership projects and private residence clubs (PRCs) and 6 destination clubs. Last year, 2011, 98 of the properties made sales, including 12 new projects, as did all 6 destination clubs.

While at first look this made not sound like a dramatic turnaround, it actually marks the first positive news from the fractional ownership industry in three years. Overall sales reached $552 million last year, which is a 4.2 percent increase from the previous year’s $530 million. It’s also important to note that most of the 207 properties that recorded no sales are older and already sold out.

The Geography of Fractional Ownership

Here’s a look at how the 305 shared ownership properties studied are geographically distributed:

  • 67 percent are in the United States (with 20 percent being specifically in Colorado and California)
  • 17 percent in Canada
  • 8 percent in the Caribbean
  • 8 percent in Mexico

Of the 98 active fractional ownership, private residence clubs and destination clubs, developments, 67 percent are fractional interest projects and 33 percent are private residence clubs. Breaking this down  further, we learn that sales volumes for fractional ownership projects totaled $103 million; for private residence clubs the total was $228 million, and for destination clubs the total was $221 million.

Overall, Dick Ragatz sees a bright future ahead for the industry, explaining, “It is widely felt in the resort real estate industry that the shared-ownership components will strongly rebound in the future.”  Dick points out that the decline in sales in previous years was caused when a group of factors came together in what he describes as, “… the perfect storm for stagnation in the sales performance of the shared-ownership industry.”

Here’s to blue skies ahead and an end to stormy weather, perfect or otherwise.