Demand for leisure shared ownership products to grow in India

Jan 29, 09 | 2:00 am

The demand for timeshare products in India is expected to grow at an annual growth rate of approximately 16% per annum from 2006 to 2015, largely facilitated by supply growth admeasured at approximately 12% per annum over the same period according to a report released by Group RCI and global real estate consultants, Cushman & Wakefield, "The Spectrum of Leisure Real Estate Products in India". This is further reflected by the growth in holiday exchange bookings that increased by 28% in the period between January to November 2008.

The report, released at HIFI 2009, indicates that the average unit sale for a typical timeshare development is likely to grow at 3% per annum from 2006 to 2015. The average unit cost per day for a consumer is likely to grow at approximately 4% per annum from 2006 to 2015, compared to approximately 5% to 8% for a pure hotel product. However, with an estimated 41,600 pure product hotel rooms across 9 major cities in India that will be furnished over the next four to five years, the markets are likely to see a drop in occupancy rates and a rationalization of average room rates in the long term.

The timeshare industry in India is in its development stage and comprises of approximately 4,640 timeshare units and 146,450 members representing approximately 241,330 timeshare weeks. Of this, the western region in India captured by Mumbai, Pune, Ahmedabad, Surat, etc holds the largest share of members with 42% of the total, followed by south (29%), north (23%) and east (6%).

According to Radhika Shastry, Managing Director, Group RCI, India, "Shared ownership of real estate, where multiple individuals own a share of a piece of real-estate, offers considerable potential for developers, operators and financial institutions. These models of ownership offer increased resilience and buoyancy during fluctuating market conditions. They provide a strong degree of insulation to key stakeholders. In response to a desire for a high quality alternative to a wholly owned second home, without the associated costs, hassles and responsibilities, sales of fractional interests of luxury condominiums, townhouses and single family cottages/ homes have demonstrated a market with considerable untapped demand in India."

Akshay Kulkarni, Director of Cushman & Wakefield Hospitality in South Asia says, "Over the last few years we have seen a keen interest as people had a growth in disposable income and saw value in investing in these alternative assets. With changing economic conditions the focus will shift from profitability to sustainability. Various products will emerge, which will be hybrid models of pure real estate products and transient accommodation models. This will allow end users to not just physically use their investments but also see some appreciation in values over a period of time."

The fractional ownership model is likely to become increasingly popular in the current market environment where an asset may be purchased for a fraction of the cost with associated use plan. The model allows for easy exit and also provides an opportunity for capital gain. The Timeshare model has also gained considerable popularity in the domestic market, driven by the perception of a relatively discounted cost of a holiday at the time of utilization as compared to the hotel product.

The future of the timeshare and fractional ownership products in the Indian real estate market is likely to be governed by several factors including price appreciation in the resale market, the degree to which development financing is available in the future (which has been a major constraint to the growth of the supply in the past and over the short to medium term given the current economic environment), the rate at which consumer awareness of the product increases in the future, the financial success of future projects as well as the extent of long-term return on investment that each product is able to generate, particularly in the current economic environment.

About Cushman & Wakefield

Cushman & Wakefield is the largest fully-integrated real estate services firm in the world. Founded in 1917, it has 227 offices in 59 countries around the globe and 15,000+ talented professionals. Cushman & Wakefield is involved in every stage of the real estate process, from strategy to execution. The firm represents clients in buying, selling, financing, leasing, managing and valuing assets, and provides strategic planning and research, portfolio analysis, site selection and space location services. Cushman & Wakefield commenced its India operations in 1997 and today has grown to over 1200 employees across our offices based in New Delhi, Gurgaon, Mumbai, Bangalore, Chennai, Hyderabad, Pune and Kolkata. The first international real estate service provider to have been granted permission by the Government of India to operate a wholly-owned subsidiary, Cushman & Wakefield India is strategically poised to service the varied needs of clients throughout the Indian sub-continent. It offers a full range of real estate services combining local expertise and experience with technology and standards of service that are well-established and consistent across all Cushman & Wakefield's offices worldwide. . A recognised leader in global real estate research, the firm publishes a broad array of proprietary reports available on its online Knowledge Center at www.cushmanwakefield.com


About Group RCI

Group RCI , part of the Wyndham Worldwide family of companies, (NYSE: WYN) is the global leader in non-hotel leisure accommodations with exclusive access for specified periods to more than 67,000 vacation properties in nearly 100 countries. Organizationally, Group RCI is comprised of vacation exchange, including RCI®, the worldwide leader in timeshare and vacation exchange and provider of travel services to businesses and consumers and The Registry CollectionÒ, the world's largest luxury exchange program; vacation rentals, including Endless Vacation RentalsSM , Landal Greenparks®, Novasol®, and more than 30 other vacation rental brands, through which vacationers can rent a wide variety of property types, from city apartments to country cottages to unique villas; and NorthCourse®, Leisure Real Estate Solutions, an international leader in providing a full spectrum of advisory, research, asset management and turnkey solutions and services. Collectively, the company delivers vacation experiences to leisure travelers around the world and provides products and services to business customers that support the growth of the leisure real estate industry. Wyndham Worldwide Corporation is one of the world's largest hospitality companies with leading brands in lodging franchising, vacation ownership, vacation rentals and vacation exchange.