The Times LUXX magazine reports on fractional ownership

28 February 2009 by Lisa Grainger


Timeshare for Toffs - Fractional ownership can make your money go further - and even help protect some of the world's most glorious landscapes

Arriving at The Point, on the shores of Upper Lake Saranac in the wilds of New York state's Adirondack Mountains, it's not hard to understand the appeal of fractional ownership. As I enter the glamorous wooden house bought by the US-based Everlands Club in 2007, wood fires are roaring and champagne is cooling in a silver ice bucket.

A masseuse is waiting "to help me unwind". Lobster chowder and beef with shiitake mushrooms are being prepared for my dinner. And a waggy-tailed Labrador accompanies me to my palatial private quarters. As an out-in-the-woods luxury home from home goes, it's pretty darn perfect.

When times were good, the Point was the private country retreat of one of the wealthiest American families, the Rockefellers. But times have changed. Today, palatial summer homes - like other luxuries such as private jets, yachts and skiing chalets - seem an unnecessary opulence for one family alone. They're a financial burden, rather than an asset.

Hence the rise in fractional ownership members' clubs, which according to US-based fractional consulting firm Ragatz Associates, rose from 40 in 2004 to 300 in 2007, trading shares worth $1.2 billion (£850 million) at the time. They're being seen as a smart way to access to five-star accommodation and transport without the overheads. Members buy a share of the asset (usually between a fifth and a fourteenth of a property portfolio, fleet of jets or yacht), are guaranteed a minimum number of weeks to use it (but no maximum), and pay annual fees to ensure someone maintains and staffs it. When they're not using it, other members are, ensuring assets are rarely empty, and are looked after.

Although fractional salesmen admit that in the past year the market has slowed due to lack of funding for new portfolio properties (for instance, Everlands' backer used to be Lehman Brothers, hence the stalled purchase of Hotel Endsleigh in Devon), the schemes haven't crashed nearly as hard as the rest of the property market.

Pezula, in South Africa, for instance, had released 28 shares in two villas for £100,000 a share, having sold out its first fractional villas in eight weeks. YachtPlus, the British company which aims to build 10 motor yachts designed by Sir Norman Foster by 2011, has sold 20 shares at $1.9 million (£1.7 million) for an eighth of a yacht.

Palazzo Tornabuoni, once the home of the Medicis in Florence, has sold 70 of its 288 shares before it opened in January. And hotels, such as the St Regis in New York, the Marriott in London, the Coral Reef Club in Barbados and the Four Seasons in Vail, are still selling private shares in apartments, which give investors the benefit of owning the bricks and mortar (assets that can be passed on through generations), but with hotel service thrown in.

Who's buying them? Wealthy investors for whom this sort of cash is small beer, according to Kit Harrison, co-founder of the uber-luxe ski company Descent International. He has just launched Botiga, an upmarket fractional club of properties in "the world's most desirable locations".

"People we've been talking to say they can spend about £100,000 on holidays a year," says Harrison. "That's if they go skiing in a private chalet, on safari, to Tuscany for a week, and do some Christmas shopping New York. So, investing half a million pounds for a lifetime of holidays, plus their annual dues (£31,000), it's not a great sum at all."

Because of the world many of the owners move in, marketing is mostly done by word of mouth. Botiga has the Earl of Mornington and Prince Nicholas of Greece to put the word out in aristocratic circles. YachtPlus has the Fosters and vice-chairman Rob Hersov to pull weight in the media and in the City. Pezula has American billionaire Keith Stewart at the helm. And Everlands has wildlife experts on board, including conservationalist Dr Richard Leakey.

The reason Everlands has conservationalists, rather than socialites, guiding the club, say director Robert L. Burch, is that they are motivated by their love of the outdoors; it's a club for those who want to experience the wild in style.

Their vision, Burch insists, is to preserve places of natural beauty for future generations. Which is why, in spite of the exclusivity of the scheme, Leakey is on their side. For a start, he says, Everlands' strategy is to work with local communities on conservation projects. The company has launched an annual $1 million (£700,000) conservation prize, with a Zaha-Hadid designed trophy, to promote their conservation ethics. And it intends to preserve the wildernesses rather than develop them.

Certainly, new ownership does seem to be bringing life back into some properties and communities. At the Point, local conservationists are working with fishermen and foresters to improve the quality of water and forestry practices.

And, most importantly, those who have bought seem to love their new homes. While Chari LeMasters, an American part owner of Castello di Casole, first thought that she would hate the idea of other people in her private space, "When you walk in, it's so beautiful that you just think, 'I'm home', because everything's in the same place", she says. " You never get a feeling that anyone's been there but you." Geoffrey Ainsworth, a financier from Cardiff, says Castello's standard of accommodation - a big Tuscan farmhouse with barn-like outhouses for his grown-up children and their partners - plus the possibility of having cooks, cleaners and concierge available, and the prospect of his children inheriting his share of the property, were also attractions. "Plus there is no maintenance; it's just there to enjoy, and it's much bigger than any house we could have bought on the market ourselves for the price."

There are a few downsides, buyers reluctantly admit. While most clubs have rules that forbid the same members booking popular weeks, such as Christmas, every year, others don't, so it's worth reading the small print before signing up. Annual dues are often not set in stone - and could rise dramatically. Membership fees are often sold in dollars or euros, making membership expensive for British purchasers. If the property struggles to find other members, your share could be difficult to sell on in the future, should you want to.

But for many, fractional ownership is a smart investment, says Rob Hersov, vice-chairman of YachtPlus and NetJets, the private jet club. "In boom times, people thought more about luxury, lifestyle, ego, desire" he says. "But today's decisions are purely financial. So the smart investor, rather than indulging in one item, is spreading assets and buying two weeks on a yacht, fours weeks in holiday villas, and 20 hours on private jets. It's safer, easier - as owners don't have the hassle of maintenance and staff - and investors can live like a millionaire without having the bank balance of one. In these tough times, that's a pretty attractive option."