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Property Frontiers Brings Investable Fractional Ownership to UK Market
July 7, 2010Article by Ray Withers
Deeded Fractional Property with 10% net yields, discount to RICS valuation and exit solution set in place.
Bacolet Bay, Grenada From Only £26,700 or $40,000
Investable Fractional Ownership has arrived at last! Through Property Frontiers, the international investment specialists, UK investors can now buy their own slice of one of the Caribbean’s most prestigious resorts with a structure that finally makes fractional ownership appealing. Caribbean Residences, Bacolet Bay is a five star resort with easy access to rain forest, mountains and sea – the three natural wonders of the region.
Fractional ownership has been much heralded as the saviour of the international property market: a revolution that will at once democratise overseas property ownership and enable developers to reinvigorate sales momentum in a sluggish market. Until now, fractional ownership has failed to capture the imagination of UK investors in the way that it has across the Atlantic in recent years.
There are three main reasons for this. First and most important of all, the fractional market has been small and under-resourced, leaving investors unsure of their exit strategy: who will buy their fraction when they want to sell? Secondly, ownership structures can seem complicated and lacking a clear sense of direct ownership. Thirdly, the returns have not been great in terms of income: much of the fractional property available on the UK market offers only lifestyle benefits.
That said, we have long believed that fractional ownership has great potential for a wide range of investors. The challenge is to put together a package that is attractive to investors, transparent and easily understood, with good yields and a clear exit strategy. With Bacolet Bay, we have achieved all three goals. We have negotiated a deal whereby each investor buys a share or fraction of an apartment or villa with direct ownership over a 999 year lease. This entitles the investor to full usufruct, which includes economic entitlement – the right to earn rental income and benefit from capital appreciation. The properties are then placed in the resort’s rental pool. Each investor then enjoys a proportionate fraction of the income generated.
In addition, the following characteristics make the investment stand out;
Properties sold at a discount to current RICS valuation (most fractional properties are sold at a premium to valuation)
Guaranteed 10% net rental yield from day 1
Exit solution in place at year 10: the whole property is sold and all proceeds and distributed to the fraction holders
No administration, maintenance or ongoing charges of any kind for investors who have no personal use of the property
For personal use, the only charge is the forgoing of your pro-rata rental income and a $30 per day occupancy charge
The apartment fractions are priced at $40,000 (£26,700) and are forecast to return $114,000 (£75,000). Villas start from $50,000 (£33,000) and are expected to return substantially more than apartments.
This is a win-win situation for investors. It is a very special opportunity to buy property at an exclusive resort for an inclusive price.
Property Frontiers is the only company dedicated to supporting investors in the world’s most investable property markets and concepts. Our mission is to research new investment opportunities, to educate and inform about all aspects of the international property markets and to support our clients at all stages of the investment process