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A holiday from ownership

Saturday, November 05, 2011

Financial Times - Richard Holledge

A holiday home once meant a house in the Dordogne or a bougainvillea-fringed villa in Andalusia. You only had time to visit it a few weeks a year and the first days were spent phoning the pool man and buying new towels, but it was yours, all yours. How old-fashioned. These days any individual worth their high net is not content with just one property, but a score.

For those who want to enjoy many different properties without the hassle of full possession, one solution could be fractional ownership. Started in the US in the early 1990s by groups of friends who pooled resources to buy holiday homes, it has developed from simple part-ownership of a property in one location to an elaborate and increasingly upmarket share in hundreds of properties around the globe.

Put simply, investors buy into a fund that entitles them to limited use of a portfolio of properties – usually about four weeks per year – but, crucially, they have a share in the equity. It may not be romantic but it is functional, if somewhat corporate.

Founder David Rogers says: “Our properties, which are in the £1m to £1.5m bracket, have all been bought with cash. We don’t have mortgages so investors know their money is safe. Our first fund, the Alpha, opened in 2006 and closed in 2007 at the height of the good times. Then it cost £159,000 to join now it is valued at £202,000 – a 27 per cent increase.”

Rocksure has recently launched the Crystal Fund at £238,000 per investor and plans to sustain prices by buying in places such as Brazil, Portugal and Morocco, which are popular with a wide range of international buyers.