Industry News

FRACTIONALS GROWING IN POPULARITY

The Future of Fractionals Looks Promising

The hottest new category of second-home real estate, fractionals, also known as private residence clubs, may well redefine the timeshare industry. At last count, according to a study by Ragatz Associates of Eugene, Ore., 62 fractional projects in various stages are located throughout the country. Of that number, two-thirds are at ski resorts and a third are in Colorado.

Defining the category is not easy, since there are so many variables among clubs. Typically, shares range from two weeks to three months, are sold as deeded ownerships and cost an average of $23,000 to $35,000 per week for two-bedroom units.

They can be townhouses, hotel-style suites or even cabins, such as at the Roaring Fork Club in Aspen, Colo. They come with fully furnished designer interiors and a level of finish work that is several pegs above the run-of-the-mill timeshare. In addition to the requisite "great room," there is usually an on-site staff that includes concierge, valet and housekeeping. Annual dues of $4,000 to $10,000 pay for employees, taxes and upkeep.

Industry observers see robust growth in the residential club concept, largely because buyers are more interested in convenience, luxury and quality of services than in any future appreciation in value.

Though the category is too new to have much of a track record on resales, a study by Hobson Ferrarini Associates of Portland, Ore, noted that the Deer Valley Club, the oldest of the genre, has had a small annual turnover rate of 5 percent. And its average appreciation of 16 percent a year is more than respectable for a fractional project. "If this example is indicative of normal appreciation," says the study, "the future of fractionals is assured."

For more information on fractional ownership units, please call Condo Hotel Center at (305) 944-3090 or send an e-mail to info@condohotelcenter.com.