Gulf developers mull timeshare options

Residents within the Middle East will spend an estimated US$1.2bn each year on shared ownership properties by 2020, with top markets including Saudi Arabia, Kuwait, Iran, Egypt and the UAE.

One in three Middle East households said Dubai would be their first choice to purchase timeshare. The benefit of the timeshare model is clear; it will enhance the high occupancy rates in Dubai and increase healthy growth in a backdrop of global economic slowdown.

With the sharp increase in construction costs and corresponding rise in the price of land, developers had been looking for innovative ways to encourage investors and stimulate new sales. Construction prices are predicted to go up by 15 to 20 per cent this year, time share provides a highly profitable option to a developer's project. In some cases developers can expect up to 300 per cent premium on the sale prices per foot versus traditional real estate.

As new regulations for the industry are implemented the timing couldn't be better for developers to capitalize on the opportunities. The new law requires developers or real estate companies looking to enter the market to apply for a time share license directly from the Real Estate Regulatory Authority (RERA). At that stage they will need to supply detailed plans of the project, company profile, background and also pay a bond prior to marketing their developments.

Dubai RERA department will distribute licensing and it is expected that a self regulating working group will provide guidance and statistical data and consultation.

The fact is that the leisure real estate market is growing rapidly. With more inventory becoming available, developers were exploring a variety of innovative techniques to support the success of the market moving forward. Both contemporary shared ownership, and rental and exchange programmes can provide excellent benefits for all stakeholders.

As long as there is careful monitoring of sales and marketing practices in the emirates and tight controls of licenses issued by RERA then we feel the timeshare model will have a huge positive economic impact and support Dubai's strategic plan to accommodate 15 million tourists by 2015. This is a significant step in the right direction and the new regulation is a definitely a welcome development.

Average length of stay from the current three days to seven night duration.

We are working with developers across Dubai and the majority of other emirates in the UAE. We anticipate the most successful projects; from a consumer's prospective will be in Dubailand, prime waterfront locations such as the Palm Jumeirah and the Palm Jebel Ali and Dubai Marina.

Our research also shows that Gulf Arabs are keen to buy into larger units of ownership, called "fractionals". Typically these focus on upscale villas and luxury apartments bought in multiples of months rather than weeks.

Conventional timeshare is said to be the tip of the iceberg with many derivatives available to help keep the leisure real estate market buoyant, with equally attractive business being generated for short-term vacation rentals, condominium hotels and rental and exchange programmes.

The fact is that both shared ownership and rental programmes offer a great incentive to developers as it provides them with a tested recession proof model that has experienced uninterrupted growth for the last decade.

The worldwide timeshare and fractional market is estimated to be worth US$13bn per year in sales and continues to enjoy healthy growth in a backdrop of global economic slowdown.

With the sharp increase in construction costs and corresponding rise in the price of land, developers had been looking for innovative ways to encourage investors and stimulate new sales.

Construction prices are predicted to go up by 15 to 20% this year, timeshare provides a highly profitable option to a developer's project. In some cases developers can expect up to 300% premium on the sale prices per foot versus traditional real estate.

As new regulations for the industry are implemented the timing couldn't be better for developers to capitalise on the opportunities.

The new law requires developers or real estate companies looking to enter the market to apply for a timeshare licence directly from the Real Estate Regulatory Authority (RERA).

At that stage they will need to supply detailed plans of the project, company profile, background and also pay a bond prior to marketing their development projects.

Dubai's RERA Department will distribute licensing and it is expected that a self-regulating working group will provide guidance and statistical data and consultation.

The fact is that the leisure real estate market is growing rapidly. With more inventory becoming available, developers are exploring a variety of innovative techniques to support the success of the market moving forward.

Both contemporary shared ownership, and rental and exchange programmes can certainly provide excellent benefits for all stakeholders.

As long as there is careful monitoring of sales and marketing practices in the emirate and tight controls of licences issued by RERA then we feel the timeshare model will have a huge positive economic impact and support Dubai's strategic plan to accommodate 15 million tourists by 2015.

This is a significant step in the right direction and the new regulation is a definitely a welcome development.

Nick Turner is managing director of RCI ME.