Ragatz Reports Slow Sector Upturn Has Begun in North, Central America Fractional Sales

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Fractional ownership real estate consultant Dick Ragatz as released his annual  state of the industry report, taking the pulse of the fractional ownership sector in the US, Canada, Caribbean and Mexico. And the numbers, which were reported at the 2012 Ragatz conference in Scottsdale, Arizona, suggest that fractional sales have bottomed out and are on a slow upward curve.

Across the countries involved, there were a total of 98 active developments in 2011, down from 104 in 2010. These are broken down in to 32 private residence clubs, and 66 fractional interest projects. For the sake of the report, Ragatz defines a PRC as anything that sells for US$1,000 per square foot upwards. There were also six active destination clubs, one more than the previous year.

Ragatz estimates that 1,925 fractions were sold in 2011, a four per cent increase from 2010's 1,850. Total sales volume was $552 million, a four per cent increase on the 2010 figure of $530 million. Significantly this is the first increase in overall volume since the peak year of 2007, when sales totalled $2.3 billion.

The average price for a fractional interest was up to $131,000 from 2010's $120,000 but the average price for a PRC interest fell from $271,000 to $254,000.

When potential purchasers were quizzed about their reasons for not buying a fractional interest, a whopping 81 per cent cited economic uncertainty, followed by 20 per cent who blamed a lack of consumer financing. Interestingly, just four per cent said they would rather own a whole ownership property.

The survey certainly hints at significant pent-up demand for fractional products, with buyers still adopting a wait-and-see attitude to the economy. More than 70 per cent of respondents (and 90 per cent of PRCs) said more consumer finance would improve their sales, while owner referrals and in-house renters were cited as the most productive sources of new leads.

Key industry trends are smaller shares, smaller unit sizes, more mixed-use resorts, and more owner privileges, especially rentals and exchange programmes.

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Top Fractional Developments Honored in London

One of the highlights of this year's Fractional Summit Europe conference was the presentation of the Fractional Life Awards. Despite tough market conditions there was a 30 per cent increase in the number of entries, with an impressive collection of developments and organisations from around the world putting themselves forward.

Event organiser Piers Brown said: "The Fractional Life Awards are going from strength to strength, and it was great to see both the quality and the number of entries this year. A Fractional Life Awards is a great seal of approval for your efforts and a real boost to your marketing campaign."

On collecting his award Stephen Wise, co-founder and director of The Hideaways Club, said: "We are thrilled to receive this type of recognition which further endorses our belief that we offer the most logical and attractive financial alternative to sole overseas property ownership. The success of the company is further proof demonstrating the rapid growth of this market trend."

The winners were:

Best Fractional Development EMEA

Shortlist:

• Vilnius Golf & Spa, Lithuania
• Castello di Casole, Tuscany
• Hilton Grand Vacations at Borgo Alle Vigne, Tuscany

Winner: Castello di Casole, Tuscany

Judges' comments: "A class act which has set the benchmark for high quality PRCs and fractionals in Europe, Castello di Casole is nothing short of stunning."

Best Fractional Development US, Canada, Mexico & Caribbean

Shortlist:

• One Steamboat Place, Steamboat Springs, Timbers Resorts
• Four Seasons Residence Club Vail

Winner: One Steamboat Place, Timbers Resorts

Judges' comments: "A luxury ski-in ski-out development, imaginatively constructed from local materials with a host of amenities for owners."

Best Fractional Development Asia

Shortlist:

• Beach Republic The Residences, Koh Samui, Thailand
• Karma Kandara Resort, Bali

Winner: Karma Kandara Resort, Bali

Judges' comments: "A stunning cliff-top development offering owners a taste of tropical luxury and glamour."

Best Private Residence Club

Shortlist:

• Fairmont Heritage Place Ghirardelli Square, San Francisco
• The Reefs Club, Bermuda
• Residences at The Little Nell, Aspen

Winner: Fairmont Heritage Place Ghirardelli Square, San Francisco

Judges' comments: "A top location and a stylish conversion of a former chocolate factory combine with great amenities to make this a superb development."

Best Destination Club

Shortlist:

• The Hideaways Club
• Rocksure Property
• Exclusive Resorts

Winner: The Hideaways Club

Judges' comments: "The Hideaways Club goes from strength to strength, with more superb properties and, importantly in these times, significantly more members each year."

Award for Innovation and Excellence

Shortlist:

• Karma Royal Group
• The Pestana Group
• Azure Services Ltd

Winner: The Pestana Group

Judges' comments: "A very accomplished real estate and hospitality all-rounder, with quality of service and fairly priced product at the core of everything it does."

Services to the Industry Award

Shortlist:

• The Registry Collection
• Karma Royal Group
• Timbers Resorts

Winner: The Registry Collection

Judges' comments: "Much more than simply an exchange programme, The Registry Collection is to be applauded for its efforts to grow the fractional marketplace through developer education."

Readers Choice Award (voted for by Fractional Life readers)

Shortlist:

• Castello di Casole, Tuscany
• Beach Republic The Residences, Koh Samui, Thailand
• Fairmont Heritage Place, Ghirardelli Square, San Francisco
• Residences at The Sebastian, Colorado

Winner: Beach Republic The Residences, Koh Samui