Developers are offering partial ownership options to survive economic slowdown
With the second home market for scenic luxury villas and weekend getaway bungalows finding no takers in slowdown times,developers are looking at alternative means. Where aggressive marketing and heavy commissions to brokers have failed to do the trick,developers are luring potential buyers with the idea of partial ownership of a vacation home.
Under this concept of fractional ownership,an individual gets the right to use the property for a specific number of weeks annually. And he can even rent out the property during this time. The fee charged by the operating brand that looks after maintenance and housekeeping will be shared by all owners.
Recently,Navi Mumbai-based Sterling Construction Systems gave buyers the option of fractional ownership for its deluxe chalets set over 60 acres of forest near Karjat with recreational amenities like river rafting,golf driving range,meditation centre and clubhouses. When a product is worth Rs 1.5 crore,not many can buy it even if they aspire to, says Harinder Bhalla,SCS president for business development.
Pointing out that the concept is popular in Europe and America,he says,In India there is a psychological block about sharing your living space. But then a decade ago,there was no concept of a vacation here. Likewise fractional ownership for vacation homes will pick up over a period of time.
The group has earmarked land in Goa,Mangalore and other places so that buyers in one project can also have the benefit of vacationing in other places. Another real estate major planning to introduce the concept is Bangalores Embassy Group.
Radhika Shastry,managing director of Resorts Condominium International (India) one of the largest timeshare exchange companies says this is a business model suited for economic slowdown. She notes how during the oil crisis of the early 70s in the US,second homes developers successfully launched the concept of timeshare (the right to use a holiday property anywhere for a predetermined time). Unlike timeshare,in fractional ownership the property is a deeded one and it gives the benefit of capital appreciation to a consumer in case he wants to sell off his share. Also,this is an economical way of having a holiday during a slowdown.
Akshay Kulkarni,South Asia director of Cushman and Wakefield (Hospitality),says the only catch is that the operating brand could find it difficult to deal with the demands of multiple owners. That was why the concept failed in Australia. Plus in India,asset ownership is an emotional process. People do not want to spend on property and then share it with someone else. Nonetheless,developers are willing to experiment in order to revive some interest in the market.
A few developers are introducing their own version of fractional ownership,customised for the Indian mindset,like the Sylvan Spring projects in Vikramgad in Thane by Disha Direct. The group had initially planned to have 16 flower-shaped bungalows. However with the slump setting in,they decided to split one home into four smaller units. Instead of selling one home to four individuals under fractional ownership,we created four individual units within the same compound. The initial cost of the home,Rs 70 lakh,gets split among four individuals but they will have their separate living spaces, says A Shyamsunder,chief operating officer of Disha Direct.