How to become a part-time millionaire

Lucinda Baring

It began in the Rocky Mountains, but now fractional ownership is all the rage in Britain, says Lucinda Baring

Fractional ownership – when people join forces to buy an asset, whether it’s a villa in Italy or a private jet – is a flourishing phenomenon. Each person buys a percentage of the asset, which is looked after by a management company, in return for relative usage. You can now buy a fraction in anything from a yacht to a handbag with a website called fractionallife.com acting as a virtual supermarket. Since its launch in December 2006, it has grown to list over 300 asset-sharing companies and now receives 18,000 hits a day. But it is fractional ownership of property that remains most popular – largely because it has the most investment potential.

It all started in America. In the early 1990s, groups of people clubbed together to buy ski lodges in the Rockies, recognising that they would each only want to use the lodge a few weeks a year. By 2006, there were 250 fractional-ownership developments in North America and a recent study conducted by PriceWaterhouseCoopers found that one-sixth of affluent US households would consider investing in the next five years. Yet although it is an established and successful model in the US, fractional ownership is still a relatively new concept in Europe. That, however, is all about to change.

Private Residence or Destination Clubs, run by big hotel groups such as Ritz-Carlton, Hyatt or Four Seasons, have been hugely popular in the US for decades. Members pay a one-off membership fee and then an annual maintenance fee in return for between four and six weeks in various properties around the world. These clubs offer one of two types of membership – both equity and non-equity – the key difference being whether or not members actually own a stake in the properties. To date, it is the non-equity membership model that has proved the most dominant.

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