This article is from the Australian Property Journal archive
REDROCK Property Investment has pioneered a new method of home ownership scheme at Mirvac's Magenta Shores project at The Entrance in New South Wales.
The fractional ownership scheme allows property investors to pool resources effectively buying a share in the ownership of a property that entitles them to use the property for a given time each year, and enjoy the potential capital gain upside.
Redrock’s managing director Sam Day said the scheme is ideal for investors who want a holiday home but not the financial or management burden of maintaining a property they only use for six weeks a year.
“The purchasing cost is shared equally between buyers who enjoy both use and ownership of the property at a fraction of the cost,” he added.
Day said in Australia fractional ownership is sometimes referred to as ‘tenants in common’.
But he said unlike timeshare, fractional owners receive a share of the property’s freehold title giving fractional owners the added benefit of any potential capital gains.
“Another benefit is that the property is operated by a professional property management company,”
Day said the scheme began in the United States in the 1980s and is now established as one of the major ways people acquire a holiday or lifestyle property in the US and across Europe.
“Recently we have seen the entry of major international companies such as Ritz-Carlton and the Four Seasons providing fractional ownership opportunities in major vacation destinations overseas.
“As Australian property prices continue to rise there are increasing number of investors who pool resources with friends and family to purchase property,” Day continued.
“The fractional ownership market is set to develop significantly. Lenders will need to respond with appropriate financing tools, and a secondary market will develop in fractional ownership holdings.
“Redrock provides fractional investors with options to exit their fractional ownership investment every 3 to 6 years,” he concluded.
The first properties to be offered through the scheme are at Mirvac’s Magenta Shores and a luxury Melbourne apartment.
Australian Property Journal
