Words: Ashley Rigg
Published: 15th March 2011
*US fractional sales drop 38%
Fractional real estate sales in the US have fallen 38% year on year, according to the latest research from a leading industry analyst.
The report from Ragatz Associates reveals that year-on-year sales fell from US$860 million in 2009 to US530 million in 2010.
The statistics cover 104 active resorts in US, Canada, Mexico and Caribbean. Fractional projects (lower priced properties) accounted for $107 million (20 per cent of sales value), Private Residence Club’s for $242 million (46 per cent) and destination clubs for $181 million (34 per cent).
Director Richard Ragatz blamed the decline on a number of factors including economic instability, a tough consumer finance market and a glut of discounted whole ownership holiday homes coming onto the market.
The positive news for the fractional industry is that fractional sales declined less than whole-ownership holiday homes which fell 60% year-on-year.
Many Europeans will be watching the US market closely to see how fractional sales recover with the economy. As the most developed fractional-ownership market in the world, it will be interesting to see whether US consumers continue to choose fractional in the same volumes when a host of low-priced holiday homes are available as substitutes.
See also: Saving Fractional and
The emotional challenge of selling fractional in Europe
Source: Global edge
User Comments
It was interesting to see the breakdown of the numbers from Dick Ragatz. The destination club sector saw the smallest drop, with only a 7% fall from 2009 to 2010.
Nick,
SherpaReport
There is no "substitute" for fractional ownership just the same as there is no "substitute" for whole ownership, they are two completley different products and concepts which create their own interest from potential purchasers based on their usage requirements, location, cost justification and of course budget.
Fractional pricing of property should be linked to current market values, if property prices drop then so should the price of a fraction.
If a developer selling fractional ownership does not reduce the price of the fractions in line with whole ownership prices then of course purchasing outright starts to make more financial sense, it's not the fractional model which is failing it is the stupidity and greed of the developer.
A well known developer in southern Spain reduced the price of their whole ownership product by 40% but left their fractional prices the same and then claimed that fractional owneship does not work, is it any wonder, you don't have to be a rocket scientist to understand why?
Ken Spencer,
Property Options Spain