Fractional Real Estate Summit Returns to Miami

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(MIAMI, FL) -- Dozens of delegates convened this week in Miami at the InterContinental Hotel for the annual Fractional Summit USA conference to discuss the future of fractional real estate and the consensus appears to be the same as it was last year. The "rationality" of owning a piece of a vacation home, rather than outright purchasing a second home, continues to make sense and the market is here to stay.

"The Golden Days of vacation ownership are ahead of us, not behind us," said guest speaker Howard Nusbaum, longtime president for the American Resort Development Association. "We just recalibrated the fundamentals.

Indeed, the future remains bright for fractional real estate but it remains to be seen whether fractional real estate will ever return to the $2.1 billion and $2.3 billion sales levels of 2006-07. Last year, fractional real estate developers recorded $530 million in sales, according to the annual Ragatz Report, the lowest level  since '03 ($513 million).

And so long as developer and consumer financing remains difficult to obtain, and the volatile global economy doesn't dramatically change, the new normal for worldwide fractional real estate sales just might be the $500 million mark.

Sluggish economies and skittish consumers notwithstanding, several developers and sales professionals at this year's Fractional Summit USA, organized by the London-based organization, FractionalLife.com, reported strong sales activity at resort properties in Bermuda, Barbados, Tuscany and other appealing vacation destinations.

For example, the Timbers Company, one of the leading developers of fractional real estate worldwide, has grown from five projects to 10 and will soon be adding an 11th development, according to director of corporate finance Greg Spencer.

Meanwhile, sales and marketing firm Peter Kempf International reports strong activity at its various global projects. One of the biggest success stories is the Reefs Club in Bermuda, where Peter Kempf has generated "65 fractional sales in the past two months and counting," according to executive vice president Randy Burgess.

The Reefs Club is being sold in 1/10th shares, starting at $179,500 for 2-bedroom villas and $229,000 for 3-bedroom villas. The current prices represent nearly a 50 percent cut from previous year values, fueling recent sales activity, Burgess explained during a case study presentation.

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New Orleans Close to Getting New City Golf Course

(NEW ORLEANS, LA) -- Six years after Hurricane Katrina devastated City Park to the tune of $43 million in damages; the beloved attraction has risen from the ashes with numerous new amenities and upgraded attractions. One long-awaited project yet to come to fruition is a proposed new $24.5 million golf course complex on the site of the closed East and West courses.

However, City Park chief executive officer Bob Becker recently told the Times-Pacayune he believes good news is finally on the way.

"We feel like we're pretty close to finalizing an agreement,'' Becker was quoted as saying, expressing optimism that the 35-member City Park board of commissioners could consider a contract proposal with the Bayou District Foundation as early as October or November.

Nearly 18 months have passed since the park began negotiating with the New Orleans nonprofit group that wants build and operate an upscale high-end 18-hole course, clubhouse and driving range between Interstate 610 and Filmore Avenue.

A key aspect of the proposal is the promise by Bayou District officials to raise $8.9 million in private money. Becker said the park is still counting on the foundation to stick to its pledge.

Becker and real estate developer Robert Lupo, the new president of the City Park Improvement Association board, have said the park is prepared to go it alone with its own money if necessary. City Park has about $15.5 million in hand - $5.9 million in FEMA reimbursements and $9.65 million from the state capital outlay program - for the golf project.

In the spring, the park board scaled back its plan, eliminating a nine-hole course and reducing from 310 acres to 250 acres the space needed for the new, 18-hole layout. Without outside investment, Lupo has said further alterations will be needed until more money can be found.

For example, he said, a new clubhouse would be put on the back burner for now, with golf operations for the new course likely housed in temporary trailers. In addition, he said driving-range improvements would be put on hold.

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