FRAC­TIONAL MODEL EVOLVES

Finweek English Edition - - Property - JOAN MULLER joanm@fin­week.co.za

WHILE THE JURY is still out on how quickly frac­tional own­er­ship will take off in South Africa, leisure prop­erty play­ers are be­com­ing in­creas­ingly in­no­va­tive in cre­at­ing new in­vest­ment prod­ucts for the coowned hol­i­day home mar­ket. De­vel­op­ment man­age­ment com­pany Mirage Leisure & De­vel­op­ment, which has been in­volved in a num­ber of high-end re­sort projects in Dubai (One & Only Royal Mirage, Mad­i­nat Jumeirah, Burj Dubai) and Mau­ri­tius (One & Only Le Touess­rok, Le Telfair) as well as SA land­marks, such as Zim­bali, Sun City and Mon­te­casino, re­cently en­tered the shared own­er­ship sec­tor via the launch of its Dream Cir­cle Des­ti­na­tion Club.

It dif­fers from tra­di­tional frac­tional own­er­ship prod­ucts: it’s based on a pref­er­ence share model, where af­ter 12 years, buy­ers get their orig­i­nal in­vest­ment back plus a share of prof­its earned.

Ian Beauchamp, who was in the lux­ury game lodge in­dus­try be­fore join­ing Mirage to head Dream Cir­cle, says the prod­uct is aimed at up­per in­come pri­vate and cor­po­rate in­vestors who want ac­cess to a port­fo­lio of exclusive hol­i­day homes in the best lo­ca­tions that south­ern Africa and the In­dian Ocean Is­lands have to of­fer.

At an en­try level of R2,2m and an an­nual us­age fee of close to R100 000, mem­ber- ship costs are sub­stan­tially higher than those of most other frac­tional or shared own­er­ship schemes. How­ever, Beauchamp main­tains Dream Cir­cle in­vestors are pay­ing a pre­mium for ex­clu­siv­ity, in terms of the qual­ity of prop­er­ties in­cluded in the port­fo­lio as well as the num­ber of own­ers (mem­ber­ship is lim­ited to 168 buy­ers). Be­sides, says Beauchamp, the prod­uct of­fers the best of both worlds. “It’s a fi­nan­cial in­vest­ment but also a qual­ity of life one.”

Un­like the tra­di­tional frac­tional model, hol­i­day us­age for buy­ers is flex­i­ble. Mem­bers have 32 days a year us­age that can be booked at any one of its prop­er­ties at any time through­out the year. How­ever, us­age over peak hol­i­days will be lim­ited to a pe­riod of 10 days/mem­ber.

Beauchamp says Dream Cir­cle’s man­date is to ac­quire a max­i­mum of 25 prop­er­ties and a yacht within 18 months, cre­at­ing a port­fo­lio val­ued at around R300m.

Dream Cir­cle’s prop­erty port­fo­lio in­cludes among oth­ers a pri­vate lodge at Wel­gevon­den Game Re­serve in the Water­berg, lux­ury homes in St Fran­cis Bay, Plet­ten­berg Bay and golf es­tates Fan­court and Si­mola (all in the South­ern Cape).

Beauchamp says there’s an early exit clause af­ter two years, with sell­ers get­ting back 80% of the pre­vail­ing mem­ber­ship fee. Af­ter 12 years the en­tire prop­erty port­fo­lio will be sold. Pref­er­ence shares will then be paid out at the orig­i­nal buy­ing price and a share of the up­side gen­er­ated on prop­erty sales.

Dream Cir­cle’s Plett prop­erty

Wel­gevon­den Game Lodge

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