A millionaire’s lifestyle – at a fraction of the price.


The economic downturn is wreaking its havoc across all demographics, so much so that even those accustomed to burning money are looking at how they can cut back –they may have the cash, but it is rather vulgar to flash in these credit-crunched times.
Cue the rise of fractional ownership.

Today’s fractional owners like the good things in life, they’re certainly affluent enough to afford them, but they don’t see the point in splashing out on something that they’re only going to use a finite number of times a year.

You can own a fraction of pretty much anything, from helicopters to hotel rooms. Ritz-Carlton and the Marriott offer fractional ownership at exclusive properties in places such as Aspen and Lake Tahoe so that people can afford a second or third home for millions of dollars less than they would ordinarily spend. Prices range from around $100,000 to $800,000 depending on the property and fraction chosen - 1/12 interest will give you 21 days at the San Francisco location, for instance.

Having your own private jet takes the hassles out of flying but you’ll need to fly 350 to 400 hours a year to make all the costs of ownership worthwhile. NetJets fractional interests start at $416,625 for a 1/16 share (the equivalent of 50 hours of annual flying time) in a Hawker 400XP. When you request a plane, either your aircraft or one of a similar or higher spec is dispatched. No long check-ins – you’ll be in the air within ten minutes of arriving at the airport, and more choice of airports.

The term ‘fractional ownership’ in its strict sense means you buy and then own a share of an asset. Therefore it is yours to sell on, so that share in a jet could prove lucrative – PrivateJetShare.com lets you post any empty seats you have online so other high-end travellers can join you on that journey and share the cost. The seller sets the price – a seat from the UK to Geneva may sell for £1,100, for example.

Boats, too, lend themselves well to fractional ownership, given you’re unlikely to want to use one all year-round. Synergy Yachting Partnerships operates luxury cruising catamarans for groups of fractional owners. Catamarans are priced by dividing the total costs for a five-year period, including management fee, by the number of owners. At the end of the period the yacht is sold and funds divided.

Given the economic gloom, fractional ownership is an area that is becoming increasingly appealing, even among the most well-healed of consumers – indeed, Fractional Life, a website dedicated to the subject, saw traffic increase by over 100% in recent months. Founder Piers Brown reckons that during a recession, consumers reassess what is important to them: “They place more emphasis on enjoying quality time and don’t want the costs and hassles associated with whole ownership luxury purchases anymore,” he says.

Do your homework

Find a lawyer with experience in fractional ownership to help you make your purchase.

Determine exactly what you get for your money. Are there extra management and maintenance fees on top? When will you have to pay for this?

When will you be able to use your asset? Is this fixed or flexible? Who gets priority and how far in advance will you need to book for popular periods?

How long are you tied into the scheme for? What happens if you need to sell, and what rights do you have to rent or sell your share to others?

www.privatejetshare.com/
www.synergyyachting.com
www.fractionallife.com
www.ritzcarltonclub.com
www.marriott.com
www.netjets.com/

15th December 2008

 

Tina Lofthouse

 

Image courtesy: Grand Residences by Marriott

Image courtesy: Synergy Yachting Partnerships