The concept of fractional ownership started off in the US to to commercialize luxury vacation homes whereby a group of clients could divide maintenance costs,taxes,security etc and use the same property for a given time period per year. Overtime this business model was extended to selling condominium apartments,theme park properties and units in beachfront resorts with hotel facilities.
The model is simple and readily applicable to any tourist related real estate development.
For the developer it is much easier to sell fractionally to raise the necessary capital to execute a project ( if off-plan ) or generate funds from fractional sales as an alternative strategy to sell a hotel asset ( if already built ) For the buyer, you acquire equity ownership in a piece of property that you legally own and receive all the benefits of the investment (including potential for appreciation of your asset ) at a fraction of the price.
This real estate segment is primarily touristic driven with demand for resort hotels and vacation homes in the sun. Brazil has an abundance of beautiful locations for such developments and fractional ownership has seen accelerated growth over the past 5 years despite traditional real estate markets suffering heavily throughout Brazil’s recession.
Some Information on Fractional Ownership Projects in Brazil
- 80 projects in 2018 , 54 in 2017 (48% increase) against only 2 in 2013
- 14 states and 39 cities throughout Brazil.
- New developments in 21 cities this year
- 336,000 fractional sales this year with a gross sales volume of R$16.3 Billion
- 70% of the sales were in the R$20-50,000 price bracket with apartment units comprising of 86% of the market share.
- A standard apartment will have 2 bedrooms with 50-65m2 and offer distinctive leisure facilities for vacationing.(theme park,golf course,water sports etc)
- Higher end house sales with prices above 90,000 per fraction accounted for 67% of the market share.
- Caldas Novas (the famous spa resort in Goias ) is the leading destination with 20 projects selling fractionally.
- Gramado (in Rio Grande do Sul ) is another trendsetter with 1500 apartments set to be launched in the coming years.
The fractional ownership model for vacation homes in Brazil is on the rise. The benefits are undoubted for both developers/hotel owners and second home buyers.
It is a force to be reckoned with and foreign hotel investors should take note of the huge potential opportunities to acquire prime land/hotel assets and launch into the fractional orbit.
Mike is a Hotel Broker in North-East Brazil with a large portfolio of resort hotels for sale in Brazil. https://www.brazilbeachhouse.com/hotels-1
Please contact him if you have any queries about hotel investment and / or fractional ownership sales in Brazil.
Resources for this article ;
