Fractional Ownership Investment with a twist

Deluxe Clubs’ executive team includes Tsitsi Sibenge, the founder and former managing director of Jack Schofi Interior Concepts, Jackie Sibenge, Financial Director at Superior Host travel and concierge. Both Sibenges have had experience in businesses whose memberships run into hundreds, but Deluxe Club is altogether more exclusive. There will be no more than six members per property – 720 in total once the scheme is fully subscribed and they will be required to stay invested in the club for a minimum of three years.

Members will have the right to use any of the villas for a certain number of weeks each year. In theory, the 720 cap on membership should mean that availability of accommodation is rarely an issue, adding to Hideaways’ attraction as a holiday scheme.

‘The likelihood of getting the weeks you want is very high,’ says Sibenge. ‘We estimate there will be a lot of availability and that these properties will probably be used for maybe 20 or 24 weeks in any one year.’

According to the Deluxe Club, the typical cost of renting an equivalent villa with inclusive concierge services is between £4,000 and £8,000 a week. Deluxe Club members who use their full annual allocation of two peak holiday season weeks and two other weeks might otherwise spend up to £25,000 on similar accommodation. This is the usual cost case for hassle-free holidays made on behalf of many timeshare schemes.

As for Deluxe Clubs’ appeal as a property investment, that remains to be seen. The club has appointed agents top well known agents such as Knight Frank, Savills, Sothebys, Christies Great Estates to identify and buy the 17 villas for the launch portfolio in locations such as the south of France, Tuscany, Majorca, Cyprus, Morocco, Portugal, Switzerland, Austria, Brazil, South Africa and Spain.

World of interiors

The homes will have an average floor area of 2,500 sq ft (232 sq m) and a minimum of four bedrooms and three bathrooms, private gardens and swimming pools, where applicable. The portfolio will also include ski chalets, villas in the sun. All of the properties will be subject to extensive refurbishment, supervised by Deluxe Clubs’ architects and interior designers.

Some are already in solicitors’ hands, and like the rest of the portfolio, they will be held for the long term.
‘We don’t plan on selling the villas,’ says Sibenge. ‘We’re going to buy and hold.’ All the assets are to be held under the UK-registered Nubia Deluxe Club Property Company, while the club operations will be run through a South African-registered Deluxe Club. Members acquire their shares in the property company and sign a membership agreement with the club company.

The dual structure has been devised by accountant BDO Stoy Hayward to ensure members’ interests are underpinned by Deluxe Club’ assets, although this structure also means the club does not come under the regulation of the Financial Services Authority.

The board will set the share price periodically, based on supply and demand. But Sibenge maintains that the strength of the share price will always reflect the underlying value of the club’s properties and will be underpinned by the exclusivity of the club membership and a guarantee that the club will never sell a share for less than a member has paid for it.

‘The price will reflect the popularity of the club,’ she says. ‘One would expect the share price to be slightly higher than the actual property backing.’

Sibenge believes the wide spread of locations is an added attraction. ‘Different markets will go up and down but you are investing in a very balanced portfolio of properties, which is much more secure than investing in one individual property,’ she says.

Then again, members will only crystallise the value of the shares if they sell them after three years. Sibenge says members can at least avoid the hassle and time involved in direct property investment transactions overseas.

Share will power

However, Deluxe Club will charge a 5% fee on completion of a share sale, with 20% of any capital gain going to the management and he remaining 80% going to the member.

According to the club, this 20% take-out will ‘provide the executive team with an incentive to buy properties on behalf of the club, with significant potential upside’.

Sibenge’s status as founding investor, as well as CEO, reflects her confidence in the success of the Deluxe Club holiday and property formula. She believes the club will be fully subscribed in two to three years a self-fulfilling process that should help it raise the money needed to get to its target of 120 properties.

She also expects success in in other parts of the global market to attract the attention of the US fractional ownership specialists which have stayed on their home turf to date, but which may offer ‘an exit’ to the launch investors in Deluxe Club.

The other obvious option, says Sibenge, is some form of initial public offering. ‘It will be a very floatable company,’ he says. ‘Certainly an IPO is potentially very attractive.’

The more immediate question is: who are the likely members – seasoned investors who feel the traditional  buy-to-let market is overheating, or fans of holiday timeshares with a desire to dabble in property?

As Sibenge puts it, there are lots of two-bedroom apartments in Benidorm that can be picked up for £200,000, but at the very least, Deluxe Club removes the ‘the hassle factor’.

‘It’s anybody who wants to invest £250,000 into property overseas,’ he says. ‘Those people who simply would like to buy a villa, but instead of spending £400,000 on one villa, here they get a choice.’ Daniel MtendiEmail: info@nubiaestates.com
          nubiastates@live.com
+263912448876Aneesa Wollet    +447593279558Tariro Sibenge +27713858358 /    +27785122292

hmmmmmmmm.. smells like a SCAM!!

seank - indeed indeed.

Especially when his first 2 posts were exactly the same.

BEWARE

Cheers

Yours in Finance
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
www.tayloredfinancialsolutions.com.au
richard@tayloredfinancialsolutions.com.au.
Lodoc loans from 7.14%

One man's meat is another man's poison. Some people are going to like the idea some people aint. Its just the way the world works. There will always be skeptics. I'm not going to sell some soppy dog story. I'm trying to get people aware of what I think is a geat idea. I'm not expecting those who dont like it to step into the line and want to sign up. But for those who want to know more and give it a try I'm open to send more information. I think all people on this forum know how hard it is to be an entreprenuer and get a good idea going. Not everyone buys into the concept. This investment strategy is not for everyone it is only for those who think they could gain from it. To be quite honest I was afraid of comments like this when I posted the forum coz when I mentioned it before some guy called Richard shot it down. Then again its not for him is it.

For the record I ave posted this reply on a similar thread which I posted entitled 'fractional ownership with a twist'. Those interested can also check out similar offers on www.hideawaysclub.com and on www.fractionallife.com which has a variety of such offers. Then maybe those guys out there always quick to jump at such oppotunities and call them scams can become a little more well read and researched.