The International Financial Advisors Hotel Investments set aside has five penthouses at the Fairmont The Palm hotel for shared ownership. Five more are expected to be added.
Timeshare penthouses offered at Dubai’s Fairmont The Palm hotel
A Kuwaiti investment company says it has sold nearly a third of its “fractional ownership shares” at residences in its Palm Jumeirah hotel in Dubai within a couple of weeks of the launch.
The International Financial Advisors (IFA) Hotel Investments, which manages Fairmont The Palm, has five penthouses at the hotel set aside for shared ownership. Five more are expected to be added.
Shared ownership, or timeshare, is catching on in the luxury hotel sector.
Chiheb Ben Mahmoud, the head of hotel advisory at Jones Lang LaSalle, Middle East and Africa region, says that while shared ownership has been viewed in the past “as a workout strategy for troubled real estate developments”, it should be viewed as a lifestyle rather than a financial investment.
Whereas Viceroy The Palm and Anantara Residences The Palm have offered whole ownership of hotel rooms in return of a percentage of the hotel profits, Fairmont Heritage Place is offering part ownership of the hotel rooms.
“There is no particularly robust regulation for this product in this country but it is coming,” said Joe Sita, the chief executive of IFA Hotels & Resorts. “The main consumer protection available is that developers cannot sell the product until it is complete.”
Each unit at Fairmont Heritage Place has 13 shares sold through a company registered in Jebel Ali Free Zone. Each of the 10 units will be owned by an individual company, which in turn will be owned by each unit’s 13 shareholders. The title deed of the unit is held by the company.
The share owners cannot sell their stake for three years, or they can wait for IFA to sell off all shares in all 10 units. They can transfer or sell the unit like a share, and prices are open to fluctuation.
The units are priced from US$150,000 to $265,000 for one and two-bedroom penthouses overlooking the sea, with a 4 per cent maintenance fee per year.
In return the owners are guaranteed a minimum 21 days at their unit, or can instead opt for two weeks at any Fairmont Heritage Place and a week at a Fairmont hotel anywhere in the world. After 21 days, they can stay at their unit without cost, based on availability, and they also have access to the hotel amenities.
Other international hotel operators offering shared ownership products, include Ritz-Carlton, Marriott Residence Club, Marriott Vacation Club, Hilton and Four Seasons.
“Luxury hotels are interested in fractional products now because they make sense,” said Mr Sita. “The global slowdown gave people pause about how they choose to spend their money. Why pay for a whole Ferrari when you are only going to drive it on the weekend? The same applies to holiday homes.”
The 384-room Fairmont The Palm opened last December after delays following the global financial crisis.