The Residence Club on Mission Beach Offers Ideally Located, Sensible Second Home Ownership

Economist Lawrence Yum reported that San Diego leads the nation in real estate recovery during his keynote address at the San Diego Association of Realtors summit on August 18. This is evidenced by rising home prices and sales coupled with a limited housing inventory due to a decline in new construction. Market conditions make this an ideal time for the debut of The Residence Club on Mission Beach, Southern California’s only beachfront residence club.

Boasting sweeping ocean views, resort-style services, and contemporary design, The Residence Club on Mission Beach is a stylish enclave of ten two-bedroom residences. Two residence types are offered – the Beach Tier residences on the ground floor and Top Tier residences above. Both reveal spectacular water views through floor to ceiling windows. The Club will have eight owners per residence. Limited-time, introductory pricing is $265,000 for Beach Tier and $325,000 for Top Tier. Similar whole ownership real estate in Mission Beach is priced up to $2 million.

Developer Ken Cornell, principal of Ocean Pacific Companies, is encouraged by the renewed optimism consumers are beginning to demonstrate. “The Residence Club on Mission Beach opened just over a month ago, and we’re receiving a very enthusiastic response,” he says. “San Diego visitors are excited by this unique opportunity to own a luxury beachfront residence at a price that they’re unlikely to ever see again.”

All residences are fully furnished and feature two bedrooms, three bathrooms, patios, living rooms, and gourmet kitchens. The Club offers cabanas, lounge chairs, and beach service to owners and their guests. Brand new cruiser bicycles and boogie boards are provided for family recreation. Rare for Mission Beach, there is complimentary underground parking on site. The Club staff provides concierge and pre-arrival grocery shopping service, security, housekeeping, and all maintenance, allowing families to completely enjoy every vacation moment.

Owners may vacation at The Residence Club on Mission Beach as often as they wish, subject only to generous and flexible reservation policies. The Club has been selected to participate in The Elite Alliance℠ which offers vacation exchange opportunities within a prestigious group of residence clubs in locations such as Deer Valley, UT; La Quinta, CA; Sedona, AZ; Jackson Hole, WY; and Bermuda.

Ocean Pacific Companies has engaged DCP International℠, pioneers of the residence club industry, to consult with them in the creation of The Residence Club on Mission Beach. DCP introduced the world’s first private residence club in Deer Valley, Utah and has since consulted with developers on dozens of residence clubs in beach, golf, ski, and urban locations such as New York City, Florida, Colorado, Italy, Bermuda, and Mexico. The Club is managed by DCM International, the world’s largest and most experienced residence club management company.

Mission Beach is a popular destination for residents of the Pacific Northwest, Midwest, and desert states who come for the beach recreation, superb climate, and proximity to downtown San Diego’s dynamic cultural offerings. Local family attractions include SeaWorld, San Diego Zoo, LEGOLAND, and Wild Animal Park. Sports fans can easily attend Chargers and Padres games.

San Diego International Airport (SAN) offers non-stop service to 43 cities, including Chicago, IL; Las Vegas, NV; Phoenix, AZ; Portland, OR; San Francisco, CA; Seattle, WA; and Vancouver, BC.

Fractional real estate professionals were brought together on Thursday 23rd and Friday 24th April in London to attend the second annual Fractional Summit.

The Summit was held at the prestigious Hilton Metropole and organised by Fractional Life with headline sponsorship from Registry Collection and sponsors: FOC – Fractional Ownership Consultancy, Citadel Trustees Ltd, DCP International, Castello di Casole – Timbers Resorts, Preferred Residences, First American Title and yooPhuket. The event attracted over 210 fractional property developers, brands and service operators together with leading property journalists.

The theme of this year’s conference ‘Fractional ownership: the rewards and opportunities’ ensured a good turnout with delegates from all around the world including Denmark, Italy, Spain, France, Portugal, Republic of Ireland, USA, Cyprus, Turkey, Mexico, Thailand, South Africa, Dubai, Russia, Australia, Cape Verde, Lebanon, India, Croatia and the United Kingdom.

The event gave fractional professionals from around the world an overview of the current state of the industry in Europe with a two-day programme of presentations and panel discussions.

One of the recent causes for concern, which is linked to making consumers more aware of fractional ownership is the lack of a clear definition of the product, with different developers using different terminology in their marketing materials. On this subject, Preben Vestdam, Principal and CEO of Valhalla Associates discussed industry definitions of luxury fractional ownership, Destination and Private Residence Clubs and the requirements of each. He spoke about and highlighted the main differences between Destination Club, PRC, fractional ownership and timeshare and ran through everything the potential fractional developer who may be considering adding one of these to his mix of products needs to know, from business models in usage plans, preferred locations, pricing methodology, and success and failure factors.

Despite managing to achieve increased positive press coverage over recent months, there’s no denying that the fractional property market in Europe is very much in its infancy, so it was very inspiring to hear from Sarah Rezak who is a senior consultant from Ragatz Associates. Sarah presented figures to show the size of the US fractional industry and how the marketplace has grown to be worth $1.6 billion dollars in 2008 (down from $2.3 billion dollars in 2007). What is interesting is that many UK and European consumers buying trends tend to follow shortly behind the US. Currently in the US there are 138 Private Residence Clubs and 12 Destination Clubs. Sarah shared with us some interesting statistics about the satisfaction levels of fractional owners – 87% of Fractional Owners and 95% of Private Residence Owners said that knowing what they know now about their purchase, they would do it again.

Following on from an interactive panel session talking about the fractional hotspots around the world we were introduced to Marc Koerts, Managing Director, Avenio Prieuré and Marina Palmerio of Timbers Resorts. At a time when many real estate developers are considering whether to change the mix of their property and may be considering a shared ownership offering we heard from two very different fractional developers, Marc Koerts shared with us his journey from being a self-confessed ‘fractional novice’ last year to, 12 months on successfully launching his mixed use “Avenio Prieuré” fractional ownership development in Provence, France – his resorts were featured in Perspective Magazine in June 2009 (available online at www.theperspectivemagazine.com). Marina Palmerio presented Timbers Resorts’ and Castello di Casole’s vision. She explained that for many, their dream is to own their own home in Tuscany, Italy and that Castello di Casole offers one of Tuscany’s most remarkable villas and surrounding estates, but also the option of whole or fractional ownership.

Nick Turner, Vice President & Head of New Developments – Europe for Registry Collection discussed the growing trend of converting traditional real estate into Fractional Ownership and gave an overview of where the fractional industry is today. His session highlighted that there are 4 main typical destinations ski, golf, beach and urban. The cost of a fractional ranges from $99,200 to $247,000 and the units are fairly large – 1670 sq ft – 2500 sq ft. The largest potential growth areas would likely be Spain, Italy, Portugal, UK, France, Cyprus and Croatia. He went on to explain how the exchange programme with Registry Collection which is the largest in the world can add huge benefits to the Fractional offering by giving the fractional owner access to 160 of some of the world’s most exclusive resorts.

As a break from concentrating on the property arena, Richard Thomas, Director of Marketing for Jet Republic gave us an amazing insight into the world of Fractional Jet Ownership. He told us about the Jet Republic mission: to revolutionise private jet travel with dramatically improved service in the air and on the ground.

Despite the current economic climate he said that they have put their money where their mouths are and have just placed the largest order in European history – 110 Learjet 60 XRs valued at $1.5 billion. The Learjet60XR is the best in its class flying higher, faster and further.

Chris Allen of Citadel Trustees spoke about the importance of getting the right structure to support the right product, right from the start. He explained the importance of getting it right from the start with a structure which supports the product from a legal, operational, sales and marketing perspective. A structure that combines flexibility for future product development with complete security for added product credibility. Doing this is both cost effective and financially logical for buyer and seller and offers each an exit route. Linked to this was a presentation from Andrew Warren, Partner, Anne Taylor, Partner from Irwin Mitchell law firm which is based in London. They spoke about the important and controversial issue that the fractional industry is currently governed by the Timeshare Directive which is part of the Consumer legislation under review at the moment in the ECC. The timeshare (Fractional) contract is a contract of accommodation use for the duration of more than one year by which a consumer acquires the right to use one or more overnight accommodation for more than one period of occupation.

The current directive states that Fractional Ownership cannot be sold as an investment. Further stipulations are that pre-contractual information should be provided in good time before the consumer is bound by any contract or offer and specific information to be contained in timeshare, long term holiday product, resale & exchange contracts. The contract should be in writing in the language of the Member State in which the client is a national. Cooling off period is extended to 14 days from the day of conclusion of the contract. If the withdrawal form is not provided, the period of withdrawal expires after one year and fourteen days. There is a total ban on advance payments, provision of guarantee, reservation of money on account and acknowledgment of debt during withdrawal period for all contracts.

Greig Holbrook from Oban Multilingual gave us a fascinating insight into the multilingual Search engine optimisation. He explained how SEO works and gave us examples of what we needed to do to increase our rankings on Google but given that not everyone searches in English or even uses Google there were other things you could do to increase your rankings. Things such as Keyphrases: Cultural variants, Search Engines, content, Domain names/localisation, Global Social Media, Growth in penetration per country.

Claude Attala – Global Managing Director of Northcourse released the findings of the first ever research paper dedicated to the fractional property market in Europe. The study, titled “Europe: Trends In Fractional Real Estate 2009” identified the following: there are 90 fractional products in Europe in the form of private residence clubs and fractional properties. Over 70% of fractional properties are located within a mixed use environment. More than 60% of these are located near the beach or a golf course, although there has been a recent growth in urban properties. Italy was chosen by those interviewed as the most desirable location followed closely by France. Portugal is also popular, followed closely by the UK, Turkey and Spain.

Of those interviewed, 33% said they were likely and 13% very likely to purchase a fractional property in the future. The remaining 54% said they were not likely to purchase a fractional at present, which highlights the need for increasing awareness of the fractional product.

We then heard some very interactive panel discussions, ‘Live’ Fractional Practical Exercises, Capturing the high net worth fractional Consumer and connecting with different cultures.

Speakers and panellists were upbeat about the future of the fractional industry despite the economic downturn, pointing at a sustained growth curve in the European fractional property market over the next few years.

The newly-launched Fractional Life Summit Awards were also presented, amongst them was Avenio Prieuré, a luxury resort development company in Provence and member of The Registry Collection, scooping the Fractional Life Award for Innovation and Excellence, the top accolade in the fractional industry.

Delegate Quotes:

“In sharp contrast to the general economic news, there was an excited buzz as new projects and current fractional successes were discussed and planned” – Eric Gummers, Howard Kennedy

“You’ll have over 300 delegates at the next one – I hope you have the space” – Peter Matthews, Cave Creative

“I really enjoyed the fractional ownership conference, expected less, very impressed, will do a lot of business from it” – Vincent Barbera, Destination Sicily.

“Great fractional property conference – it served its purpose and I enjoyed all the speakers. I’ll definitely attend next year” – Chris Bannister, GRM Solicitors.

“I think it’s been one of the best conferences and feel very positive. I would have liked to have more representatives there, will bring more next year” – Richard Thomas, Jet Republic.

“I enjoyed the conference very much, very positive feedback, panel discussions were great. I got to meet everyone I wanted to” – Maurizio Bisicky, Marriott Vacation Club International.

“It’s the first event I’ve been to in a while that has exceeded my expectations. I noticed many new faces, both developers and suppliers coming into the industry. In a time when most markets are looking inwards, it was great to see people actually making plans to enter or expand their operations in the fractional market” -
Ioannis Verdelis, Select Ownership.

Research predicts fractionals will be first to emerge from economic downturn

As the first real estate development to offer fractional ownership in Washington state, The Lake House at Chelan provides second home buyers with the opportunity to own a luxury vacation home despite the economic recession.
According to Ragatz Associates, an elite real estate research firm based in Eugene, Ore., the luxury fractional segment of the vacation home market will be the first to rebound from the current real estate slow down. 

Despite the real estate downturn, fractional sales grew in 2007 and have dramatically increased over the past five years.  Unlike second home owners who may have a difficult time justifying the high cost of a low utilized residence, fractional ownership allows owners to purchase only what they need.

Fractional ownership experts at DCP International, a Chicago-based management company of private residence clubs, agree.  Their research indicates that vacation homes are one of the most desired, major discretionary expenditures of affluent households, second only to college educations for their children.  The shared annual cost of fractional ownership is significantly less than merely renting a comparable luxury home multiple times per year.  Plus, fractional residences reduce the waste of unoccupied housing by accommodating guests year-round.

“Pre-sales of residences at The Lake House have flourished despite the volatile economy,” said Brian Merrill, sales manager of The Lake House at Chelan.  “Many buyers of fractional ownership do not require financing, but for those who do, we connect them with lender financing from a local bank that is supporting our community.”

To-date, The Lake House has sold 22% of its fractional segments during pre-sales alone.  North Cascades National Bank offers fixed-rate conventional financing for buyers.  In addition to fractional ownership, The Lake House at Chelan offers luxury vacation rentals featuring a unique combination of services and amenities with team members handling everything from housekeeping and grocery shopping to renting recreation equipment, arranging wine tours and making golf tee times or dinner reservations.  The Lake House is expected to open in March 2009 and has already begun booking reservations for this summer.
For more information about The Lake House at Chelan, visit www.thelakehousechelan.com.

About The Lake House at Chelan
Located in the heart of downtown Chelan with stunning lake views, The Lake House at Chelan offers fully furnished, richly appointed residences and vacation rentals.  The Lake House is just steps away from Lake Chelan at 402 West Manson Highway, close to award-winning wineries, golf courses, and outdoor activities including beach volleyball, basketball courts, tennis courts, skateboard parks, walking trails and a water park.  The Lake House features a unique combination of services and amenities with team members handling everything from housekeeping and grocery shopping to renting recreation equipment, arranging wine tours and making golf tee times or dinner reservations.  The adjoining Pool House is a 4,000 square foot activity center for owners and guests, offering a year-round pool and hot tub, Splash Zone, fitness room, game room, indoor/outdoor kitchen and more.  Experience The Lake House Lifestyle, as an owner or a resort guest.  For more information, please call (509) 293-5982 or visit www.thelakehousechelan.com.

This month sees Perspective Magazine’s reach extend further again – shortly after taking the lead as the most read independent B2B publication for the timeshare and fractional industry, we now add even more conventions to review list and where our magazine is officially distributed – AMDETUR, Mexico, CARE, USA and The Fractional Summit, UK. As part of the latter, this month we feature a number of fractional ownership articles, including the poineers of the fractional industry, DCP International and one of their properties in Bermuda, a review of a recent industry convention in Miami and we have an exclusive interview with the new Managing Director of Group RCI UK and RCI Europe, Jonathan Back on his new role and plans for the future. Plus Front Cover Sponsors, Seasons Holidays announce their fractional ownership product, 8keys.

And now you can read Perspective Magazine using the latest Page Turn Technology for enhanced user experience! Just click on the magazine or links below to see just how different it is.

EDITION HIGHLIGHTS Front Cover Sponsorship: Seasons Holidays Perspective A-List: Jonathan Back, Managing Director Group RCI UK & RCI Europe Convention Review: AMDETUR Convention Review: Miami – Destination & Private Residence Club Industry Symposium Feature: Indirect Tax – A Changing Landscape? Event: The Group RCI Christel House Open – UK Tournanment Industry Resource: Perspective Buyers Guide Fractonal Industry Review: Residence Club Pioneer DCP International Revolutionizes Second Homeownership Feature: Bermuda Beckons Feature: The Time Is Right for Fractional Developments…If You Know What You’re Doing Feature: C.A.R.E – Co-operative Association of Resort Exchangers View Edition Online | Download To Hard Drive

Steve Dering, DCP Founder and Consultant to Developers Reflects on the Growing Industry

Multitudes of luxury second homes rarely used by their owners are a common staple of most resort destinations. Every year, these homeowners spend tens of thousands of dollars on taxes, maintenance and security on properties that sit vacant the majority of the time.

In the late 1980s a Park City, UT advertising executive and former marketing director of the town’s prestigious ski area Deer Valley Resort, sought to develop a more sensible form of vacation homeownership. Steve Dering, a Maryland native, moved to Park City in 1973 when it was a near dormant ski town – long before the Olympics and the Sundance Film Festival propelled it into an internationally known destination.

Dering noticed a plethora of luxurious vacation homes in Deer Valley being used an average of four weeks a year. Finding this an expensive ski vacation when he calculated the cost per day that owners use their homes – not to mention a wasteful practice – he reasoned that developers could sell properties as fractions, allowing buyers to pay considerably less while affording them the same amount of use they
would get from whole ownership homes. Moreover, Dering realized that these properties could offer hotel-style services and amenities since the costs would be spread over a significantly larger owner base, allowing for more enjoyable and carefree vacations.

“My goal was to develop a way for people to improve their vacation experiences by eliminating the
maintenance headaches that second home ownership typically entails,” Dering explains. “In a place like Deer Valley, you have to deal with snow removal, broken pipes, and cosmetic repairs following harsh winters, and summer landscaping. My vision was to have all of this taken care of for owners by property staff.”

After introducing the product to various ski areas, it occurred to me that luxury fractional ownership could be a successful endeavor in any type of resort destination where second home real estate is very expensive.

From these ideas, the Deer Valley Club was born in 1992, a decade following the ski area’s inaugural season. The Deer Valley Club would serve as a prototype for what would become known as private residence clubs, a luxury form of fractional ownership. As the first development of its kind, the Deer Valley Club offered on-site storage for its owners, allowing them to travel to their residences without the excessive baggage ski vacations require. Prior to owner arrival, club staff had ski gear placed in owner lockers and clothing laid out in the residence. Other convenient services included airport pick-up, pre-arrival grocery shopping, on-site concierge, and housekeeping.

One of the challenges this new vacation ownership concept faced was the comparison to timeshare when in fact it is completely different. Private residence clubs have only six to eight owners per residence, are more luxurious properties, and offer deeded real estate ownership that can be sold, willed or transferred like any other form of real estate. Timeshare is the purchase of a specific week of vacation time hence 50 owners per residence. Residence club owners enjoy greater flexibility in that they can reserve planned weeks
in advance and may also reserve on a short-notice or space-available basis. Club owners are not wedded to a specific residence, a factor that allows for even more flexibility – they may vacation in any residence within the category they purchased.

The Deer Valley Club proved to be a highly popular concept to those interested in owning ski property,
allowing buyers to have a ski home in a prime ski-in, ski-out location with firstclass services for a fraction of the cost of whole ownership. Originally the developers anticipated selling out the property for $13 million as condominiums; however, the residence club results far exceeded their expectations – the club sold out for a total of $22 million.

This real estate success story had developers in other ski areas eagerly knocking on Dering’s door. As a result, he founded DCP InternationalSM, a company that would expertly deliver the residence club concept to other popular resort destinations by consulting with developers on the sales, marketing and design of such properties. While Dering has kept his home in Park City, DCP set up its operational headquarters in Chicago and has project managers in various other locations throughout the country who work hand-in-hand with developers.

During the sales phase of the Deer Valley Club, there were some interesting observations. “Early on, the biggest surprise was that almost all our buyers could afford their own Deer Valle home,” says Dering. “But they did the same math I did and recognized that traditional second home ownership made little sense for them. They also found that residence club ownership would be considerably more convenient.”

Throughout much of the 1990s, DCP International helped developers launch private residence clubs in other western ski resort towns, including the Christie Club in Steamboat Springs, CO and Franz Klammer Lodge in Telluride, CO.

“After introducing the product to various ski areas, it occurred to me that luxury fractional ownership could be a successful endeavor in any type of resort destination where second home real estate is very expensive,” Dering recalls. “It seemed reasonable that people who are frequent visitors to specific beach destinations, golf destinations, and even urban areas would be likely enthusiasts of private
residence club ownership.”

Looking to expand the residence club concept to additional vacation destinations, DCP International introduced the first residence club in Bermuda with The Residence Club at Tucker’s Point and the first residence club in Mexico with Club Quinta Real in Huatulco. They are now consulting on a second property
in Huatulco, Encanto Villas & Residence Club, whose first phase is due to open in winter 2009. The company was also a pioneer in the urban market by creating The Phillips Club in Manhattan near Lincoln Center – the first private residence club in a major metropolitan area. The sold-out Phillips Club spawned
Phillips Club II, currently in sales. Whisking the concept across the Atlantic, DCP helped create Europe’s first urban residence club, Palazzo Tornabuoni in Florence, Italy – a property that is attracting both American and European buyers.

“The Europeans are really embracing the concept of fractional ownership, and now we have a London office to oversee our growing number of properties,” Dering comments. “Moreover, with the weakened dollar,
Europeans are finding tremendous value in purchasing residence club memberships off the continent. For example, we have a second project in Bermuda, The Reefs Club, which is being marketed to the United Kingdom. This is a great deal for the Brits given the Bermuda dollar is tied to the U.S. dollar, and there is nonstop flight service from London.”

The Reefs Club is a project tied to a luxury hotel. The Reefs is Bermuda’s most awardwinning hotel and boasts a remarkable number of repeat visitors year after year. For these enthusiasts of the hotel and Bermuda, The Reefs Club is a sensible purchase, especially in light of government restrictions on whole ownership properties being sold to foreigners. These restrictions have driven home prices well into the millions and have greatly limited the supply, making Bermuda an ideal location for fractional real estate, which can legally be sold to non-Bermudians. David Dodwell, developer of The Reefs Club who engaged DCP says, “Many East Coast cities offer two-hour, non-stop flights to Bermuda, making us a convenient second home destination. We are providing repeat visitors the opportunity to own a luxury residence on the same secluded pink-sand beach The Reefs is renowned for and to enjoy the same type of first-class service the hotel offers.”

Owners of The Reefs Club will have their own amenities such as an infinity-edge pool, rooftop putting green, and owners’ lounge. Two-bedroom residences start at $350,000 and three-bedrooms are priced at $410,000 for a one-tenth share – a significant value considering the whole ownership homes currently listed on the island start at $4.4 million and condos average $2.4 million. DCP has been enlisted by several developers in Florida, the latest of which is Magnolia Private Residence Club on coastal Highway 30-A between Destin and Panama City on the Panhandle. The club is offering threebedroom residences priced at just $159,000 for a one-eighth share.

“Many developers who initially created their projects to be whole ownership, have been adversely affected by the soft market, particularly in Florida,” Dering explains. “They are now looking for new and creative ways to sell. They are discovering that private residence clubs are a logical solution since they are a lifestyle purchase that come with a real estate deed as opposed to an appreciation driven real estate investment..”

Magnolia Private Residence Club is largely appealing to a regional market – those within driving distance from Atlanta, New Orleans, and other nearby cities. Dering believes close proximity will be a significant draw, and the company is expanding into more regional markets. “The ability to vacation at a club anytime there is availability is particularly attractive for people who frequent these destinations,” he notes.

DCP is also planning to expand more into Europe. Dering expects to add three to five more clubs there in the near future. Even during this time of economic uncertainty, DCP is consulting on a growing number of
projects. According to resort market research firm Ragatz Associates, the private residence club industry grew 12 percent in 2007 over the previous year. DCP reports to have more than $2 billion either sold, under contract, or in development.

After 18 years in the industry, Dering has observed that consumer awareness and acceptance are growing rapidly as more clubs enter the marketplace. He adds, “As is the case with developers, the current soft real
estate market has affluent buyers looking for a vacation home alternative that is lifestyle driven, not investment-driven. Our product delivers value in all market conditions because the carrying costs are much lower while the level of services and amenities is much higher than traditional real estate. Hence, the vacation value exceens the annual cost of ownership.”

As far as the future of the private residence club industry, Dering says, “All indicators point to continued growth. For me, the most important barometer is owner satisfaction, which continues to be high at
all our clubs.”

He adds that the two comments most heard from owners are “It just makes so much sense,” and “The only thing I have to worry about is when I’m coming back.” Dering’s opinion is supported by other industry experts.

“Residence clubs continue to be the fastest growing segment of the luxury vacation home sector,” notes Dr. Richard Ragatz, founder of Ragatz Associates, a leading real estate research firm. “This growth is attributable to greater consumer awareness and extremely high owner satisfaction. Increasingly, affluent
buyers are recognizing that residence clubs offer distinct advantages over whole ownership and timeshares.”

With such an enthusiastic response from owners and developers, DCP International is poised to remain an industry leader and continue to deliver successful residence clubs to worldwide destinations.

For more information on DCP International’s projects and developer services, visit
www.dcp-international.com.