FRACTIONAL MODEL EVOLVES
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