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From the Frying Pan into the Fire / Residential Market Trends

April 1, 2009

Analysis of:Developers reconsider partial ownership model | www.iht.com

Fractional interests, residence clubs, and other "Shared Ownership" ventures are risky business. European developers wanting to give their standing inventory a change of clothes may find themselves longing for the cozy warmth of the frying pan. While a seductive idea, consider the premise: A builder who cannot find a buyer for necessary shelter, seeks a solution in finding four buyers for its discretionary use. Residential developers will need a new math. Four Seasons, Starwood, Marriott, and Fairmont enjoy the marketing muscle of their guest lists, the credibility of their brand, and deep pockets. Timeshare intervals notwithstanding, efforts have not produced to expectation in this market segment. Projecting a bountiful European market defies all that has transpired. Demand for fractional ownership is not naturally occurring. It is created by massive marketing investment. A scheme to bail a builders bacon, perhaps. An industry? I doubt it.

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