Press Release - The Shores @ The Ocean
Fractional Ownership Gaining
Popularity
By Natali T. Del Conte
The Examiner — San Francisco
Why buy the whole cow when you can buy just
the part you’re
going to use? That is the rationalebehind fractional home ownership.
“Fractionals
are for the rational rich,” says Howard Nusbaum, president
and CEO of the AmericanResort Development Association. “They’re
for people that won’t eat the whole pizza and don’t
mindjust buying the slice. Why spend $3 million on a vacation condominium
in Vail that I use six weeksa year when I can spend $300,000 for
six weeks in that condo?”
Fractional homeowners purchase a
portion of a vacation home in which they do not intend to live
formore than a handful of weeks a year, typically at a fractional
interest resort. The concept is basicallya hybrid of tenancy in
common (TIC) and vacation time-shares although legally, they are
nodifferent in terms of rights and ownership than a time-share.
“Sales
for fractional home ownerships in 2004 amounted to approximately
$1.5 billion, which was atripling of sales from 2003,” said
Dick Ragatz, a consultant who specializes in fractionals. “We
areanticipating sales in 2005 to be over $2 billion, so there’s
been an incredible growth.”
A report by Ragatz Associates
shows that fractional interest resorts exist primarily in four
types ofdestinations: ski (52 percent), golf (23 percent), beach
(20 percent) and urban (3 percent).
San Francisco is a prime destination
for urban fractionals due to The City’s limited space and
highreal estate prices. This year two major fractional resorts
are under construction: The Ritz-CarltonClub at 690 Market St. — the
old Chronicle Building — and a second one in Ghirardelli
Square byFairmont Hotels & Resorts (FHR).
“[This] offers
the rare opportunity to live in one of San Francisco’s landmark
buildings whileenjoying the Ritz-Carlton lifestyle,” says
Robert van Dijk, a representative for the San Franciscoproject.
Jim Chappell, president of the San Francisco
Planning and Urban Research Association (SPUR)says these projects
are consistent with The City’s goal to pull more life into the downtown areasafter
working hours.
“This meets our public objective, which is
to have a 24-hour downtown,” Chappell says. “If youthink
of a downtown restaurant, they are filled with people for an hour
at lunchtime and then closedby 5:30 p.m. This will put people in
street life on the sidewalks in the evening as well as in thedaytime.
It supports health clubs, and neighborhood laundries and all of
the things that support acommunity.”
The Ritz-Carlton Club
began accepting reservations for the new resort on March 1. Van
Dijk wouldnot disclose how many sign-ups they’ve had thus
far, but did say that they are “doing very well.” In
addition to the 49 fractionals, the Ritz-Carlton will also sell
52 private ownership units.
The target demographic for fractional
home ownership is baby boomers with oodles of money.
“You
have a large percentage of the population in the lifecycle where
they’re beginning to thinkabout retirement,” Nusbaum
says. “They have more free time and affluence and, unlike
theirparents’ generation, don’t have that Depression
era mentality of having to own your own stuff. Theylove the idea
of shared assets.” The concept of fractional ownership extends
to other high-end assets, such as yachts and jets.
Fractional resorts
are ostentatiously luxurious. The refrigerator will have been stocked
to the clients’request, and a gourmet chef is available to
prepare food at the owners’ whim. Owners have a storageunit
so that upon arrival, personal items such as family photos will
have been placed exactly wherethey were left. Despite the intimacy
of owning a home with another family, experts say owners typically
do notrequest to meet each other.
“As long as they’re
in a club environment with people like themselves, they don’t
care,” Nusbaumexplains. “People don’t feel the
need to own a golf course, but they want to feel that everybodybuying
into it is in the same socio-economic group.”
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