Holiday Homes Portal News

Franschhoek is the home to Lermitage Private Residence Club

Date: 28/09/2009
Article source: www.themonth.co.za

The Lermitage Private Residence Club is launched on The Fransche Hoek Estate in the five-star Lermitage Franschhoek Chateau and Villas this month. Thys Geyser, a resident of Franschhoek, specializes in consulting and developing “fractional ownership” projects in South Africa. He pioneered the creation of the fractional ownership’s self regulating body “SAAFI” where he still acts as chairman, and was the MD of Pam Golding’s fractional initiative before becoming one of the only independent fractional consultants. The Month spoke to Thys about this project and what it entails. We asked him what exactly does “fractional ownership” mean?

TG: Fractional ownership sounds new but it is merely a stylish structure to collectively own an appreciating asset, managed by professionals for your benefit. You then pay only for the portion you own, but you enjoy it in its entirety.

The Month: Sounds like a syndicate or timeshare?

TG: In South Africa we have always been exposed to joint ownership through basic property syndications, but predominantly these have had little, or no, managed hospitality services.

Fractional ownership is the next level up, if you like, with a more formal structured method of co-ownership, but with managed hospitality and support services.

The Month: So, in simple terms, it is a method of owning property with other parties, but the management of the property is done by an external management company?

TG: Yes, with the owners enjoying the use of the property according to an agreed roster which rotates throughout the year. This concept allows for use, property ownership, no involvement in management and the only costs incurred relate to the owner’s share of the property.

The Month: So the difference between timeshare and fractional interests lies in the aspect of ownership.

TG: There are fundamental differences in the products, with the core being property ownership and owner involvement. In Fractional Ownership products the owners own the underlying property in perpetuity so have an equity component, whereas the most timeshare products are pure use rights, which are typically for a defined period only.

The Month: So what then is a “private residence club”?

TG: There are a number of models in the shared vacation equity ownership market, with the syndicate being the least managed and fractional ownership third party managed, but the private residence club is the most advanced, supported and managed by a hospitality or hotel operator.

The Month: Which means?

TG: Typically, in the private residence club a number of units are grouped together into an identifiable cluster that form part of a resort’s package, luxuriously furnished and entirely managed by the host resort. In other words, the hotel manages all aspects of the product; the financial affairs, the housekeeping, hospitality, rental, exchange and bookings.

The Month: Who else is doing this in SA, and is it working?

TG: There are, so far, only three others. Pezula (in Knysna) launched their private residence club three years ago (and are now planning their second phase), Zimbali (in Northern Kwa-Zulu Natal) launched theirs last year and recently Zorgvliet launched on a game farm in the Northern Province. They have all seen high demand.

The Month: By way of comparison, what are the villas at Lermitage like?

TG: They are 150 square metres in size and comprise two balconies, an undercover patio, lounge with dining room, fully equipped kitchen and two en-suite bedrooms all furnished with the highest quality furniture and creature comforts. The allocation is 21 days or three evenly-spaced weeks per year, which is entirely comparable to Pezula and Zimbali which sell at R890k and R825k respectively.

The Month: And the prices for the two bedroom Lermitage villas?

TG: We’re launching them at just R325k per share

The Month: So let me get this exactly right. The buyer owns 3/52ths of the property and has rights of use for three weeks a year. It’s all managed for him and he’s free to sell at any time?

TG: Exactly. Supported by a five-star hotel, located in one of the most prestigious villages in SA and priced at less than 50% of its rivals. When you break it down, however, and look at what you would spend on three weeks a year of ‘straight usage’, you’re up at around R60 000 per year anyway. So over five years you’ll have spent R300 000 and if you choose not to use the weeks you can bank unused time and exchange it for similar use in more than thirty other destinations. Then, of course, you enjoy the capital appreciation of the equity.

The Month: How many ‘units’ are you launching?

TG: We have restricted the project to four villas so there are 68 shares available for sale. This ensures that there is no over supply and that the demand will drive prices up in future.

The Month: Lastly, Thys, what does Lermitage offer?

TG: In a nutshell, a five-star Manor House with lounges, a restaurant, chapel, conference facility, recognized spa and treatment centre, a bistro/street café, two pools and a range of on-site activities with views over the Franschhoek valley.

The Month: All sounds very exciting Thys. Thanks for your time and good luck with the venture.