Eight Questions Every Developer Should Ask
Should I add fractions to my existing project?
Possibly. Having existing infrastructure, amenities, built product, proprietary databases, brand awareness and marketing and sales organizations are tremendous advantages in getting into the fractional ownership or Private Residence Club business. However, as noted below, there are well-established criteria for success.
Under what circumstances does fractional make the most sense?
There are some well-accepted criteria which seem to be consistently present in successful projects. Among them are location in a well-known resort destination; a diminishing supply of high-end whole ownership real estate; rapidly increasing prices of whole ownership real estate; a high incidence of repeat affluent visitors; ease of access and a sufficient number of high-season weeks. As demographics and vacation patterns have changed we feel criteria such as drive-to locations, mid-market pricing and certain lifestyle niches also have tremendous potential.
How do I plan the best fractional project?
The most important fact you need to know is “is there a market for my proposed fractional product?” As simple as it sounds we recommend asking your potential owners, and have developed the Star Marketability Assessment Report (SMART) for this purpose. The Report will make recommendations on fraction size, project scale, use plan, unit size, pricing, market depth, and a host of other critical considerations necessary for the go-or-no-go decision.
Who are the buyers for fractional real estate?
Affluent leading edge baby-boomers who are repeat visitors to a location and who are smart investors. When correctly positioned as a “part-time second home,” fractional ownership offers an intelligent option to families of some means to own a vacation home in a favored destination for far less than whole ownership.
How can I improve sales in today’s economy?
Create exceptional value, mine your existing database and create new owner benefits from existing amenities. There are undoubtedly households out there who, when they previously said “no” actually meant “not now.” They have already indicated an interest in purchasing your project.
Can a fractional program “save” an otherwise troubled project?
Occasionally, yes. Most likely, no. First you must ask yourself “If this didn’t work before, what makes me think it will work as a fractional?” Great location, bad product? Great product, bad location? Overcrowded market? Overpriced product? Difficult to get to? Lack of amenities? You built it and they didn’t come? All that said, there can be circumstances where fractions can overcome unsuccessful whole ownership offerings. Lower price points. lower annual dues, niche markets, bundled owner benefits, exchange programs and higher levels of personal service are all possibilities to explore.
How has the downturn in the housing market affected the market for fractional real estate?
Today’s housing market has impacted fractional ownership in three ways. One, in the short-term sales have undoubtedly flattened. Two, in the mid-term we believe that good projects will rebound more quickly than the economy in general because (a) there is a greater acceptance of fractional ownership in many different project categories and (b) there is a substantial amount of discretionary wealth sitting on the sidelines. And three, the economic downturn has created a rare window of time for experienced developers to plan an exceptional fractional offering without missing the market.
Why Star Resort Group?
Experience. Expertise. Flexibility. The principals in Star Resort Group have been leaders in the industry since the industry began. Each has his or her area of expertise, be it product development, project management, legal, sales and/or marketing. We have walked in your shoes, having successfully developed projects on our own account. And we’re smart enough to know that you are smart enough to surround yourself with an intelligent team. So we can bring our entire cadre of resources to bear, or coordinate with your group on an advisory basis.
