The regional shared ownership market is well positioned to thrive as the economic downturn leads to new opportunities for proactive real estate developers, says Group RCI Middle East managing director Jeff Tisdall

In Dubai, is there a legal framework for shared ownership developments?

The Dubai Real Estate Regulatory Authority (RERA) is in the advanced stages of preparing the legal framework for shared ownership in Dubai. Draft legislation has been circulated and is awaiting final approval.

The legal framework is a sign of a maturing market and is important for developers and consumers. It serves to make industry best practices standard, provides consumers with peace of mind and transparency, and assures new entrants to the industry of a level playing field.

In our experience globally, the successful collaboration of industry leaders and government to create a strong legal framework for shared ownership has proven to be an important catalyst for growth.

Are there similar frameworks in other GCC countries?

Saudi Arabia introduced a legal framework for shared ownership in 2007. Like the UAE, Qatar, Oman and Bahrain, Saudi Arabia offers developers and hospitality companies significant growth opportunities.

How has the Dubai timeshare market grown over the past year?

The development boom in Dubai of the last five years has created one of the most compelling shared ownership opportunities in the world. Exciting mixed-use developments like The Walk at Jumeirah Beach Residence are now online. The combination of direct beach access, a variety of hotels and a massive retail and restaurant promenade has created a tremendous marketing platform to support success in shared ownership. This opportunity led property management company, Salwan (part of Dubai Properties and Dubai World), to confirmplans for a points-based vacation club. The product is complete and sales are expected to commence later this year.

Similarly, IFA Hotels and Resorts is taking advantage of its role as a leading residential developer on The Palm, Jumeirah by launching its latest shared ownership offering, the IFA Vacation Club. In addition to a collection of luxury resort homes on The Palm, owners will enjoy access to properties in Portugal, South Africa and Thailand.

The cooling of the Dubai property market and the approaching completion of flagship tourist developments has ironically created significant opportunity and intensified interest in vacation ownership and private residence clubs. Today’s market for leisure real estate is quickly moving from its investor orientation of recent years towards an end-user and leisure focus. By creating ownership interests that offer an annual allotment of personal usage to match consumer needs, shared ownership is the ultimate end-user product.

Shared ownership has a very important role to play in ushering in a new area of growth and development in Dubai, plus it makes the emirate a more accessible tourist destination. Moreover, it will provide developers with an important strategy for monetising unsold inventory and offer operators a means of building occupancies and year-round usage.

In 2008, RCI sister company Northcourse Leisure Real Estate Solutions predicted GCC nationals would be spending US $1.2 billion per year on shared ownership leisure real estate by 2020 and up to 20% of Dubai’s inbound tourists could be staying in non-hotel accommodation as the market matures. Has anything changed to make you rethink recent NorthCourse market-sizing estimates?

The fundamentals are in place to make Dubai a world leader in shared ownership. When identifying promising markets we look for: a variety of attractions and world-class tourist amenities, strong hotel ADRs and occupancies, relatively-flat seasonality, leisure-travel oriented venues that are pedestrian-friendly and affluent travellers. All of these prerequisites for success are in place in Dubai.

Ironically, the events of the last year have served to increase the scale of the opportunity in Dubai. As the property market has cooled, mixed-use developers have had to look beyond residential whole ownership as the anchor of their business plans. Shared ownership is an attractive alternative for such developers and meets an important set of consumer needs. It’s interesting to note that conditions in Dubai today mirror those that initially gave rise to the emergence of the shared ownership industry in the US in the 1970s.

What are the trends for timeshare?

The shared ownership market in the Middle East has evolved in a similar manner to US and European markets, but on an accelerated basis. In Egypt and in the GCC, early entrants typically offered fixed-week products.

However, already we are seeing the introduction of club structures (IFA) and points-based products (Salwan). The market is quickly moving towards increasingly sophisticated products and structures.

What types of fractionals would Group RCI recommend?

Consumers today are seeking value and are wary of uncertainty.The opportunity we see for developers of fractional and private residence clubs is to create products that emphasise lifestyle,location and deliver annual usage, which is proportional to the vacation time that the prospective target market has available to them.

Of course, the right global exchange solution is critical. While buyers typically fall in love with the destination in which they purchase, they are reassured by the flexibility of knowing they can exchange use of their home for luxury vacations around the world. This is where Group RCI’s The Registry Collection^® comes in — owners at resorts which have been extended the prestigious The Registry Collection designation are nowable to access 163 resorts and leisure assets worldwide.

What new projects have you opened/signed this year?

Recent affiliates include Salwan, the IFA Vacation Club and Country Club in Dubai. We see continued momentum in the GCC — and more broadly in the Middle East — in shared ownership as developers seek to diversify mixed-use developments.

How would you sum up the impact of the economic downturn on the shared ownership market?

Positively, shared ownership owners continue to travel during market downturns as they have already purchased at least one shared ownership interest and therefore own an asset which they can exchange for vacations worldwide. Interestingly, we have actually seen an increase in exchange activity by our Middle East members over the last 12 months.

Our interpretation of the market from between October 2008 and April 2009 is that many developers were evaluating market conditions and coming to terms with new realities. More recently, we have observed a heightened interest in vacation ownership, fractional and private residence clubs as developers look to add value to their mixed-use developments. In part, shared ownership is seen as a potential solution to business plans which have been negatively-impacted by the slowdown in residential property markets. Increasingly, developers understand shared ownership is an end-user product.

Secondly, leisure resort developers are seeing great synergies between shared ownership, hotel assets and commercial real estate components of mixed-use developments.