Fractional Ownership of Retirement Properties in Asia

Fractional Property Ownership in Asia

For Australians and other nationalities wanting to spend a large or small fraction of the year in Asia, or elsewhere overseas, the fractional ownership of property makes eminent sense. You are not paying for a property that would otherwise be left idle for a portion of the year and it remains professionally and locally managed. This is not however an investment decision, but a lifestyle decision - and the difference lies in the fact that there should be no necessary expectation that the expenditure will earn you a positive return over time. It may, depending upon how any interest in the property is structured and the performance of the foreign real estate market, but be wary if any participation in a scheme guarantees returns, and particularly unrealistic ones.

Particularly for those considering retirement into Asia, and wanting to simplify their life, the focus should be in ensuring that any scheme in which they participate has quality properties, managed professionally within detailed and robust legal provisions. Many of the higher quality properties will also have participation available in international swap programs - allowing you to access similar properties in other countries around the world on a regular or occasional basis, should you wish.

Two high-quality options currently available in Phuket, Thailand, a perennial favourite of Australian expatriates and retirees, include the Baan Yamu and Dewa Phuket developments. Baan Yamu is a luxury residential development whilst Dewa is a condominium property linked to an established resort hotel with its own dedicated facilities, but sharing the hotel services. These are substantial two and three bedroom apartments, ranging in size from a total of 177 m2 to 268 m2 in size.

Most of these type of facilities are developed around owners having relatively short stays, but the developers recognise that there are opportunities and providing for the retiree market in Australia. This will include a strong emphasis on health and wellness, access to quality local healthcare and discounted golf and fitness programs. To provide an indication of current pricing, the cost of 1/4 share in one of the properties, entitling you to 12 weeks accommodation per year, which can be structured to be taken in blocks of 30 or 60 consecutive days or in blocks of two consecutive weeks, will range between USD160,000 and USD250,000.

One major issue with fractional ownership has always been realising your capital, and both the projects above are structured with a product term of 15 years, after which the properties will be sold unless a majority of co-owners within each property elect to extend for a further five years. So, unlike the typical timeshare product, the fractional owners will have a beneficial interest in the proceeds of sale of their apartment and will realise capital sum at the end of the product term.

If you would like more information about either or both developments, please use inquiry form at the bottom of this page to make contact. We would stress that these types of developments will not suit everyone, and in this particular case the developers have very stringent income qualification thresholds for prospective buyers - effectively you would need to demonstrate a minimum income of USD200,000 per annum. Whatever your situation, we always advise independent professional advice - both legal and financial - to provide some objectivity prior to committing to any participation. Physically visiting the apartment is also obviously essential and the developers will assist in terms of providing discounted access to accommodation.