Where 12 individuals own shares in a single unit, it means that each buyer owns the property for one month every year. Rental income is shared factoring in the time each co-owner availed the apartment for letting.
Fractional ownership, popularised by American investors in the 1990s, is almost similar to a time-share except that it has fewer buyers (12 maximum) which increases the amount of time available to each buyer.
The concept is reserved for luxury homes in vacation destinations such as Mombasa and Malindi, and it is offered by both multi-unit developers and high-end resorts.
It allows an individual to take part of a valuable asset (holiday home) without raising the cash to buy the entire property outright. The concept is very similar to owning shares in a company.
Fractional home ownership made its way into the Kenyan market about two years ago when a local developer, Baobab Development Group, rolled out a 32-unit housing complex in Malindi where an individual can fractionally own an apartment for four weeks every year after paying a one-off fee of Sh1.8 million.
Baobab Group’s sales manager Miriam Magare said: “Most of them (buyers) are here for business and therefore prefer buying shares of the house and then receiving returns even when away because we rent the houses on their behalf.”
Every co-owner is allocated a week each quarter of the year until the four weeks elapse, said Ms Magare who added that the apartments come with a full legal title on a 99-year lease.