In the heart of the Caribbean, Barbados emerges not just as a paradisiacal destination but also as a beacon of innovative investment opportunities, particularly in the realm of real estate. Barbados’ fractional or shared ownership has gained deserved traction, as it offers a unique blend of luxury and practicality for those looking to own a piece of paradise. Understanding fractional ownership is key to unlocking its potential.
Join us as we delve into the intricacies of this emerging trend, exploring how it allows individuals to enjoy the benefits of owning a high-value asset in Barbados without the full-scale commitment and costs traditionally associated with such investments. We will navigate through the legal landscape, economic implications, and personal experiences that define fractional ownership, painting a vivid picture of what it means to own a slice of Barbadian luxury.
On this insightful journey, we unravel how fractional ownership is reshaping property investment in Barbados, making it accessible, sustainable, and enticing to a global audience.
Fractional Ownership in a Royal Villa at Royal Westmoreland
What is fractional ownership?
Fractional ownership in Barbados refers to a method of property ownership where several unrelated parties can share in, and mitigate the risks of, owning a high-value tangible asset, typically a piece of luxury real estate. This concept is especially popular in vacation destinations like Barbados, where the demand for luxury homes and villas is high, but the cost of owning such a property outright can be prohibitive. Here’s a breakdown of how it works and its key features:
Shared Ownership Structure: In fractional ownership, a property is divided into shares (fractions), and each share is owned by a different individual. These individuals share the costs and benefits of the property.
Usage Rights: Each owner is typically allotted a certain period of time during which they can use the property. This schedule is often predetermined and rotates among the owners to ensure fair access.
Cost Efficiency: By sharing the costs of purchase and maintenance with other owners, individuals can enjoy the benefits of a luxury property in Barbados without bearing the full financial burden. This includes sharing expenses like property management, upkeep, and taxes.
Luxury Properties: Fractional ownership in Barbados is often associated with high-end properties such as beachfront villas, luxury condos, and resort residences. These properties offer amenities that might be unaffordable for an individual owner, such as swimming pools, spas, and access to resort facilities.
Legal Structure: The legal structure of fractional ownership can vary. It might be set up as a corporation, a partnership, or a trust, with each owner holding an equal or proportional share of the entity that legally owns the property.
Resale and Transfer: The resale or transfer of a fractional share can be subject to specific terms and conditions, as agreed upon by all co-owners or as stated in the legal agreement governing the ownership.
Local Market Adaptation: In Barbados, fractional ownership is adapted to cater to the local real estate market, with considerations for local laws, real estate trends, and the specific demands of potential owners, often foreign investors or vacationers.
Fractional ownership at Beach Houses by The Crane
Where Did Fractional Ownership Come From?
The fractional ownership industry began in the US in the Rocky Mountains in the early 1990s. Resort developers recognised that visitors did not want to purchase a property which would only be used for a few weeks a year, but the timeshare model did not provide a suitable alternative.
Today, fractional ownership is synonymous with luxury developments offering vacation homes in high-end resort destinations in desirable locations. Often, they include groups of individual houses or condominiums, beautifully designed and furnished with access to a range of amenities. As a result, every aspect of the development emanates exclusivity, luxury and desirability.
By 2021, there were 319 fractional developments in the US alone (source: Ragatz). It is expected that the industry will be on a growth track as the economy improves and people begin travelling again after the pandemic.
There are three leading fractional ownership developments here in Barbados at Royal Westmoreland, The East Resort and The Crane Resort.
Is fractional ownership a wise financial decision?
Fractional ownership represents a savvy financial decision for many, particularly for those seeking a balance between luxury and affordability. By opting for fractional ownership, investors gain access to high-end properties at a fraction of the cost, enjoying the perks of a luxury lifestyle without the full-scale financial burden.
This approach not only makes high-value real estate accessible but also mitigates financial risks through shared ownership. As the property value appreciates, so does the potential return on investment, offering a tangible asset that can grow over time.
Additionally, the shared responsibility for maintenance and upkeep significantly reduces individual costs, making it an economically sound choice. Especially in sought-after locations like Barbados, where real estate is often in high demand, fractional ownership can be a particularly astute way to enter the market, providing both enjoyment and potential financial benefits.
Is it possible to finance fractional ownership?
Yes, the fractional resort developers offer finance options here in Barbados, and the Residence Barbados team will assist with introductions.
What you should consider before purchasing
- Make sure the resort’s location, accommodation and amenities suit your needs and requirements.
- Read the sales agreement and understand the legal structure, your obligations and management costs.
- Find out what extra services the package includes and whether there is a charge for them.
- Look at any other properties that the developer has in its portfolio.
- Learn how the reservation system works, especially during peak times.
Shared ownership at the Crane Resort’s Residences on the Ocean
Pros and Cons of Fractional Ownership
1 Less Expensive
If you dream of owning a luxury property in Barbados, but a US$1 million villa is out of reach, or you don’t have time to make the most of a whole ownership property, fractional ownership is the ideal solution.
With fractional ownership, you purchase access to the property you want, for the time that you need, in the most desirable location for a price you can afford.
This also applies to home upkeep and maintenance costs which are shared between the other owners of the property. Fractional ownership makes long-term ownership much more feasible by splitting upkeep costs.
2 Well Maintained Property
No home should be empty for more than 48 weeks in a year, especially in the Tropics! The fractional ownership property will be regularly lived in, cleaned, and professionally maintained. Also, it will be fully furnished and equipped, ready for you to enjoy. There is no need to worry about maintenance, gardening, paying bills, organising security, or handling issues. This is all covered by an annual fee and the management company.
Opening and closing windows and doors, running water, turning on the air conditioner and heater, and using facilities like the pool are all necessary for home maintenance. It allows for early detection of problems and preserving the home’s long-term worth.
3 Peace of mind
With fractional ownership, you effectively have a group that shares accountability, schedules upkeep, checks on the home, and splits the work and responsibilities that would otherwise be left to a single owner. This means you can fly into Barbados and begin your holiday as soon as you arrive.
Shared ownership at Royal Westmoreland’s Golf Cottages
4 Selling can be a time-consuming process
Selling your fractional ownership can be more complicated than selling a whole ownership property. While it isn’t as difficult as selling a timeshare, it’s best to work with a local agent like Residence Barbados, who has experience selling these types of ownership.
5 Your ownership is protected
Many fractional ownership developments are held in trust to protect owners should anything happen at the resort, community or location. For example, the fractional ownership at Royal Westmoreland is held in trust by First National Trustee Company Ltd., an experienced Trustee based on the Isle of Man.
The function of an independent trustee is to hold the legal ownership of each property for the benefit of the owners. They will ensure the property is free from any mortgage, lien or encumbrance and ensure nothing happens that might prejudice the ownership until the termination date.
6 A stepping stone to full ownership
Here in Barbados, fractional ownership is used by many as a stepping stone to full property ownership overtime. While enjoying vacations on the weeks they own every year, they can explore the island and the resort community. Then, when they are ready, they can move to full ownership. And the good news is that the developers allow you to trade in your fractional product. So, you are simply stepping from one level of ownership to another with minimum risk.
If fractional ownership is something that might suit you and your family at this time, give the Residence Barbados team a call today at +1 246 230 4982 or email at contact@residencebarbados.com. We’ll explain how the concept works in greater detail, introduce the resort communities and show you around the properties.
Content Disclaimer
The information contained above about fractional or shared ownership is provided for information purposes only. The contents of this blog post are not intended to amount to advice and you should not rely on any of the contents of this post. Professional advice should be obtained before taking or refraining from taking any action as a result of the contents of this post. Residence Barbados disclaims all liability and responsibility arising from any reliance placed on any of the contents of this newsletter.
