Co-ownership focuses on offering equal parts of fractional shares for one single-family estate dripping with luxury.
Co-Ownership Part of Larger Trend of Buying Lux Assets in Fractional Shares
We’ve all noticed trending syndicate or co-ownership acquisitions of luxury assets such as art or racehorses or yachts. Now, with soaring interest in second-home ownership, potential buyers of luxury second homes are buying fractional shares of one luxury home or estate.
In addition to tapping into millennial preferences of experiential living, co-ownership buying makes buying luxury assets affordably possible.
For example, one share of a restored farmhouse with a vineyard and olive grove set between Italy’s Apennine Mountains and the Adriatic Sea is just a short walk to the shops in the medieval village of Montefiore dell’Aso. The price of a fractional share in this co-ownership property? Just under $160,000 for five weeks of access per year.
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How Does Fractional Co-Ownership Work?
Fractional co-ownership shares have been sold by luxury resort properties such as the St. Regis, Ritz Carlton and Four Seasons for years.
Unlike past tense timeshares, fractional shares offer co-ownership opportunities to buyers for an equal part of the property. Buyers are allowed to buy more than one share in order to have more time on the property.
Demand Soaring for Co-Ownership Opportunities
According to Redfin, demand for co-ownership properties increased +128% y/y in March 2021.
A 12-year-old family-run boutique real estate development in the UK, Appassinoata (translation – with passion),founded by Dawn Cavanagh-Hobbs and Michael Hobbs, is currently offering co-ownership opportunities in several properties located in Italy.
Cavanaugh-Hobbs said, “Our original plan was to buy, restore and sell luxury holiday homes. After spending months researching this idea, we quickly realized that many foreigners who own properties rarely used them for more than five weeks a year and the worry, stress and expense of owning a home outright wasn’t cost effective and was difficult to manage and maintain from afar.”
Appassinoata buys, restores and renovates the property and then seeks buyers for fractional co-ownership shares in that property. Each of their properties offer 10 co-ownership shares though buyers can and often do buy more than one share in order to have more time with the property. Appassinoata manages the property with funds provided by all co-owners at a flat, annual management fee. If and when a buyer chooses to sell a share of the property, Appassinoata brokers all aspects of the transaction. The co-ownership seller keeps the profits when the share is sold.
Purchasers of Co-Ownership Shares Love Both Concept AND Reality
The idea of being able to own a “piece of ultimate luxury” at an affordable price seems almost too good to be true. In fact, the share price and annual service charge are considerably less than the cost of a weekly rental for a comparable property in a comparable location.
One such co-ownership share owner said, “Five weeks are enough to enjoy and feel that we belong to the area, with time in the year to visit other parts of the world…and it’s a larger property with more extensive grounds that we could otherwise afford had we been buying alone.”
Thanks to Manion Global