Europe and Asia turn to partial home ownership
European and Asian developers are beginning to offer fractional property ownership options, previously more common in North America, as more homes abroad go unsold.
These programs allow buyers to purchase a share of a home or apartment. The arrangement includes a percentage of the profit (or loss) if the property is sold. Fractional buyers also share maintenance costs.
The Oceanico Group in Ireland, David Lloyd Resorts in Britain, Grupo Pinar in Spain, the Zorgvliet Group in South Africa and Vertuz Development in Thailand are among the developers now offering fractional ownership, the International Herald Tribune reported.
Many industry executives say consumers are starting to look to fractional property ownership as an alternative to second home purchases. The market for fractionals could even be bigger in Europe than in the U.S. within 10 years, said Peter Kempf, president of European operations at consulting firm DCP International.
Among industry professionals, too, interest in fractional ownership programs is high. Attendance at last month’s Fractional Summit in London was expected to be 250, up from 125 last year.
Fractional ownership plans have several benefits for developers. Their revenues are often higher, for example, because the prices they can charge for the shares of a fractional property are higher in total than the price of the unit as a whole.
Russia’s wealthiest woman requests financial aid
Yelena Baturina, developer of Moscow’s Project Orange, a complex shaped like pieces of fruit, recently applied for $1.4 billion in government loan guarantees for her construction company, the International Herald Tribune reported. Baturina is the wealthiest woman in Russia, with an estimated personal fortune of $4.2 billion.
Her construction company, Inteko, plans to use the loans to replace outdated cement factories and other facilities, the company said in a statement. Russia’s Ministry for Economic Development has asked the company to provide a more detailed breakdown of how it would use the money.
Russia’s developers have struggled in the global economic meltdown. Baturina fell off the annual Forbes ranking of billionaires this year, as did the eight other Russian developers.
While one lawmaker, Sergei S. Mitrokhin, has said Baturina is out of touch with ordinary Russians, several Russian real estate analysts said the government needs to help developers like her before they start defaulting on loans.
With fewer foreign buyers, Bulgarian market slows
Property sales in Bulgaria have stalled as home sales to foreigners grind to a near halt. In three of the southern Bulgarian ski resorts popular with foreigners — Bansko, Pamporovo and Borovets — sales dropped 80 percent in 2008 from 2007, according to the International Herald Tribune. Sales volume fell by 30 percent along the Black Sea, another region that previously drew foreign buyers.
Overall, the country saw a 40 percent drop in property sales and a price decline to $88.40 per square foot, from $92.25.
The majority of the buyers in the country’s market now are Bulgarian, said Georgi Ridjalski, a Re/Max broker in Sofia. The only foreigners still wading into the homebuying waters are Russian, he said.
Compiled by Sara Polsky