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Owning a Fraction
of a Luxury Resort
DIVIDING THE VACATION PIE
BY IRIS WINSTON
Summer at the lake. Building castles in
the sand. Swimming with the kids next
door. Throwing sticks for Fido. Boating
and fishing. Just being with the extended
family.
Going to the cottage has long
been one of Canadians’ favourite pastimes.
Recalling summers at the beachfront
cabin that has been in the family
for several generations brings back
warm memories.
Those were the days
For the lucky people who still have
a cottage in the family — even one with
an outdoor privy — they are days that
come round each summer for current
and future generations to enjoy.
But what about those who do not
have such a special place?
They may decide to rent a waterfront
property in a resort area for a
week or two. Depending on the precise
location and where on the primitive-toluxurious
ladder the property sits, that
could cost anywhere from $400 to
$4,000 or more a week.
With prices like this, some may
think that buying is a better option.
They will soon discover that a similarly
broad price range applies. And,
because waterfront property, particularly
in Ontario, is getting scarcer and
property prices everywhere are rising,
costs are shooting up.
“Demand for recreational property
has sent waterfront prices spiraling
upward,” points out the most recent
RE/MAX Recreational Property
Report in reviewing trends and prices
across the country.
According to the 2007 report
released May 1, the top end of the market
appears to be gaining the most. It
points out that “luxury recreational
property sales are set to soar in the
coming months as affluent baby
boomers drive the demand for upscale
products from coast to coast.”
Teardowns, custom-builds and
major renovations are changing the
shorelines of lakes and rivers Canadawide.
The limited inventory has contributed
to increasing prices in more
than half the markets across the country.
While Atlantic Canada still offers buyers
“the best bang for their buck,” starting
prices are over $500,000 in a third of
recreational property markets and very
few areas offer even basic waterfront
properties for less than $250,000.
The alternative to investing in the
whole of a high-priced property is to
buy a piece of a luxury resort for part
of the year.
This fractional ownership — one
of the fastest-growing trends in vacation-property
purchasing — is changing
the face of summer and winter
leisure time at the cottage drastically.
The fractional ownership concept
began outside the real estate market
with such items as airplanes or large
yachts that were too pricey for one person’s
budget but manageable if several
people pooled their finances. As property
prices rose, the idea transferred to
purchasing part of a vacation home
that the purchaser would, in any case,
use for only a limited time each year.
Fractional ownership (the highest
priced versions are sometimes called
private residence clubs) first became
popular in ski resorts in the 1990s. The
idea has now spread to luxury resorts
for all seasons around the world.
Fractional ownership is partial
ownership of a property. Rather than
one individual becoming the sole
owner, several individuals each purchase
a segment of a resort and so gain
the right to occupy one unit and use
the resort facilities for a specific number
of weeks each year. As well as reducing
the investment in the vacation real
estate, purchasing a fraction is built
around the level of expected use.
Suppose, for example, that there
are 10 upscale dwellings on the property
and that the fractions for sale are
five-week segments in each building.
Assuming that each purchaser buys
one five-week portion (which could
cost anywhere from an average of
$30,000 to $100,000, depending on the
Due West/Due East Magazine • Summer 2008 Ottawa Page 26