Home Owners At A Fraction of the Price

Source: www.thebeachtimes.com
By Leland Baxter-Neal

A new trend emerging in Costa Rican real estate is offering buyers a chance to step into a luxury condominium at a fraction of the price, through a system called fractional ownership. In it, multiple buyers become owners of the same piece of property, such as an ocean view condominium. All are owners with deeds to the property, inscribed in Costa Rica’s National Registry, and take turns at the property throughout the year. It is not, however, a timeshare — a point heavily emphasized by the handful of developers beginning to push this model in Costa Rica. “People still often don’t understand the difference between a timeshare and fractional,” said Rosa Romero with Ocotalito, a development located on Playa Ocotal beach in northern Guanacaste. Ms Romero noted that through time share properties, buyers buy time, not property. “With a fractional, you are owner for life and you will return to the villa that is yours,” she said. Well-established in the United States, fractional property sales are just beginning to arrive in Costa Rica. Developers promoting these properties note that they give buyers the opportunity to own a piece of a property that might otherwise be beyond their budget. “The good thing about it is that if you want to have a 5000-square-foot, $2-million condo, you get that high end luxury for an affordable price,” said Gary Clarke of Tamarindo-based ABC Realty. “But it hasn’t really been tested here in the community.” Though a few developers in the Central Pacific, Guanacaste and the Central Valley are beginning to market fractional ownership properties, several realtors The Beach Times spoke with this week cautioned the market might here might not yet be ready for it. “The problem with fractional ownership is it’s a much more complicated sale unless you have a really seasoned marketing guy,” said Raymond Cruise, of VIP Costa Rica, a real estate office based out of Escazú, in the Central Valley. “It’s really a matter of advertising and marketing. You cannot have a real fractional ownership sale unless you’ve got people that really know how to market to that demographic.” Brad Sanson, a Canadian who drove to Costa Rica with his family in 1999 to found Vista CR, has already built Vista Mar, a 28-unit, standard ownership condominium project, and has one 17-story tower (Vista Las Palmas) and one 15-story tower (Vista Azul) under construction. He is also working with his son Paul Sanson to launch Jacó Beach Towers, which they claim will be the first beachfront fractional ownership project in the region. Mr Sanson said they decided to go into fractional after their research showed buyers only spend a small amount of time at the property each year. The Jacó Beach Tower features 50 condominiums in a 10-story, beachfront tower (construction begins June 2008 and should finish by December 2009) and four town homes, with each property split into four fractions. Owners alternate time at the property in two week intervals every two months, which alternates every year, scheduled out through 2014. “That way, everyone gets Christmas, Thanksgiving and New Years,” Mr Sanson said.
© Photo Courtesy

SHARING THE WEALTH: An artist’s rendering of Jacó Beach Towers. (Photo Courtesy of RSA) While the townhouses have yet to be priced, the condos, which range from 1250 square feet to 2870 square feet, will go on sale next year for between $125,000 and $400,000 per fraction. “You do spend more on marketing,” Mr Sanson said. “Instead of selling a building with 54 owners, we now have to attract 215 owners. We have to be that more visible, and that takes a lot of marketing.” Mr Sanson said his company does much of their marketing in the United States, Canada and Europe, with print ads, CD’s, online advertising and visits to tradeshows. “Of course we cater to the walk-by and tourists that come down,” he added. Jacó Beach Tower will hold its first “sales event” in February of next year, during which interested buyers that have deposited a refundable $10,000 in an escrow account in the United States fly down to Costa Rica (airfare refunded if a property is bought) for a four-day, expenses paid visit during which they meet developers and architects, see the site and, if they opt to purchase, choose their unit. “This is a very big extravaganza,” said Paul Sanson. Tranquilo in Punta Leona, another fractional condominium project located north of Jacó in the expansive Punta Leona development, was beginning its second sales event late this week, with more than 30 interested clients having flown to Costa Rica to see the site and potentially purchase a fraction. During Tranquilo’s first event, held a few months earlier with another 30 buyers, contracts for a total $4.5 million were signed, said Matt Stringer, Tranquilo’s in-country representative. Tranquilo’s three-bedroom, three-and-a-half bath, 2200-square-foot condominiums overlooking the Pacific Ocean are divided into quarter shares, and allows buyers to buy all four fractions of the entire property at a 3 per cent discount. Owners get three calendar months per year, of their choosing, and can stay in other condos in the case of a conflict with other owners of the same property. In addition, Mr Stringer says the project is pre-approved for The Registry Collection, which groups luxury fractional properties — including yachts — around the world. Tranquilo owners would then be able to trade time at their condo for any other property in the collection. “The other key component is that it’s designed to be vacation home ownership without the hassles. No calls from rental management. When you buy it is fully equipped ,” he said. “We designed this so its exactly like owning your own property. You can buy, sell or will it to your heirs.” Ms Romero, of Ocotalito in Guanacaste, said: “The novelty is that you are an owner only for six weeks, so you don’t have as many expenses such as condo fees and annual property taxes will be less.” The Ocotalito project has a total of 36 villas between 12 three-story buildings. Of those, 26 are fractional ownership, between 2337 square feet and 2637 square feet, and sell for $140,000 to $300,000. “We believe fractionals are more adjusted to the current market,” Ms Romero said. “More people can access them and pay this type of price.” Brian Smith, a real estate agent with CR Beach Investment Real Estate in Jacó, however said he has yet to see much interest in fractionals. “We’ve had people coming down interested in fractions end up buying a whole unit,” Mr Smith said. “Fractional ownership is a good concept for top end developers,” said Les Nunez, of First Realty in Playa Hermosa, Guanacaste. “To reach out and touch people that are potential fractional buyers, that has to be very well thought out.”

Posted by Roger Vlasos
Broker/Owner
Century21 At the Beach
Playas del Coco, Guanacaste
Costa Rica Off: 011 (506) 670-2200
Costa Rica Cell: 011 (506) 893-4850
US Phone number: (919) 341-8400
Email: roger@century21incostarica.com
Website: http://www.century21incostarica.com/
Website: http://www.northpacificproperties.com/