Print
insiderCMYK


A weekly e-letter sharing insights, recommendation, tips and discoveries about property in both Paris and France!
A Free Weekly Newsletter Written by Adrian Leeds®  and Published by the Adrian Leeds Group


 Fractional Property Le Palace des Vosges

Sharing Paris

French Property Insider
Volume XIV, Issue 49
Thursday, December 22, 2016 • Paris, France

Don't miss a single issue of French Property Insider! "Whitelist" French Property Insider by adding "[email protected]" to your address book.



ADRIAN LEEDS GROUP APARTMENTS

Welcome to your home in Paris. Home is how you will feel in a private apartment in Paris that has the "seal of approval" from Parler Paris Apartments, Paris Sharing and me, Adrian Leeds.

Adrian Leeds Group apartments - Le Beaubourg
LE BEAUBOURG

Located in a grand Haussmannian building, just steps from Le Centre Georges Pompidou, Le Beaubourg is a masterpiece of design and function. Warm, elegant shimmery colors mixed with luxurious fabrics, rich upholstery and elegant crystal and glassworks combine to create a space that you won’t want to leave.

Book your stay today! 

Visit Adrian Leeds Group Apartments to view our full selection or email: [email protected]

FREE one-hour consultation! Guests of the Adrian Leeds Group apartments who are considering the purchase of their own "pied-à-terre" for pleasure and profit, can take advantage of a free one-hour consultation while enjoying the apartment in the City of Light or on the Riviera. Simply complete the request form to book your consultation.


Bonjour French Property Insider Subscriber,

In the mid 2000s, fractional ownership became very popular in Paris. Several developers sold properties in Paris in parts -- or fractions -- or shares -- for usage by the shareholders in a relative proportion of time. The fractions sold quickly and the business was thriving until the economic crash in 2008 when Americans, who mostly purchased the shares, lost so much of their savings and had nothing extra with which to buy the shares.

Take note. Fractional Ownership is not Timeshare. "Fractional ownership is a method in which several unrelated parties can share in, and mitigate the risk of, ownership of a high-value tangible asset, usually a jet, yacht or piece of resort real estate. It can be done for strictly monetary reasons, but typically there is some amount of personal access involved. One of the main motivators for a fractional purchase is the ability to share the costs of maintaining an asset that will not be used full time by one owner. Conceptually, fractional ownership is not the same as timeshare. Fractional ownership affords much of the freedom and usage benefits offered in timeshare, however, the fundamental difference with fractional ownership is that the purchaser owns part of the title (as opposed to units of "time"). Therefore, if the property appreciates in value, then so do the shares. As with whole ownership, fractional owners can sell whenever they deem necessary or prudent, releasing the capital growth from their 'bricks & mortar' investment." (Wikipedia.org)

Plalace des Vosges Owner InaugurationPalace des Vosges Owner Inauguration

Since the 2008 economic crash, few to no properties have been placed on the Paris market. Our own "Palace des Vosges" project was one of the last ones to be sold. There are few to no shares available for purchase on the Paris market, even resale shares. Those who made their purchases early on have mostly been happy enough with the arrangement to hang on to them.

Because of the stringent rental laws in Paris which make it difficult for the owner of a secondary residence to rent their property when not personally using it, we believe that fractional ownership could experience a resurgence. A property shared by four to 13 owners would offer an investment for the owners as well as rightful usage with no question of illegal rental.

Fractional ownership has its pros and cons for both the owners and developers. For the owners, it can be a great way to park their money in a safe investment, have usage of a beautiful property, share in the maintenance and expense and have a perfect solution to having a home in Paris...or at least a part of one, without the woes of short-term rental. For the developers, it can be very profitable. Often a developer doubles as an owner -- the developer sells it but holds one or more shares for himself.

All that sounds great, but there are lots of pitfalls along the way. Attorneys specializing in fractional ownership will tell you that the fewer the owners, the bigger the problems -- as they become more proprietary, the bigger their shares. I've heard some very troublesome stories over the years with disputes among owners, some of which were serious enough to land in the courts and others that were silly skirmishes over what art to hang on the walls.

The key to a successful shared property is in the foundation and legal structure as well as the capability of the developer himself. If done correctly, everyone can be overjoyed and it can work like a well-oiled machine. If not, it can create a volatile situation that renders everyone frustrated and helpless. I have seen both situations.

Le Palace des Vosges was one of those that exemplifies success for the owners. There are 13 owners, each with four weeks usage per year, none of whom wish to sell their shares (at this point in time). The property chosen was very special and of particular value. The legal structure was set up correctly from the beginning with a strict set of by-laws to which the owners must adhere. The usage calendar was set up with enough flexibility to satisfy a broad base of shareholders' needs. It was professionally renovated and decorated in advance of the sale of the shares so that buyers of the shares agreed to it "as is," avoiding disputes about the furnishings, etc. The shares were sold by one agent (our company), so that the new buyers were screened for being good additions to the group of owners. A professional management company maintains the property so owners need not be involved in the day-to-operations. There is a board of directors and governing body that makes the decisions, with annual meetings just as if it were an entire building in Paris -- run very similarly to a "coprpriété."

Le Palace des Vosges wasn't quite as successful for the developers. It took five years to fully sell out because it was one of the last on the market having launched in 2009, when the market was at the bottom. The developers didn't make as much profit as they had hoped because legal costs were underestimated and the length of time to sell out all the shares dragged on longer than was anticipated. When the last share was sold (four times! -- a story in itself), I vowed never to do another one.

Now, I've changed my mind. I believe the timing is ripe for more fractional ownership properties in Paris. The short-term rental situation is creating a real need for more properties in which regular visitors to Paris can share. With the experience we have, I believe that we, more than almost any other professionals in the Paris market, know how to make a fractional ownership property work and be successful for the shareholder and profitable for the developer. Here are the rules to success:

1. Find a special property and pay cash for it (no mortgage)
2. Set up the legal structure correctly using a specialized attorney
3. Set up a flexible usage calendar to satisfy the most shareholders
4. Professionally renovate and decorate to perfection
5. Sell to like-minded shareholders, using one sales organization
6. Have it professionally managed

There are several ways to accomplish this. If you own a property you think would make a good fractional, it's possible to convert it and sell off the shares, or some of them, but it's a bit more complicated than if you set out to find and purchase a property that is viable. Having one decision-maker in the development of the property is key to a developer's success -- it's the old adage of "too many cooks in the kitchen spoil the broth."

If you are interested in any of these concepts and willing to "follow the rules" of a successful fractional ownership property, complete this online questionnaire.

We'll happily respond to your inquiry and help you in your endeavor to own or develop a fractional ownership property.

Happy Holidays to all.

A bientôt,

Adrian Leeds - in Palace des Vosges Paris France

Adrian Leeds
The Adrian Leeds Group

(in Palace des Vosges)

Respond to Adrian: [email protected]

 

 
 
 

P.S. There is one more issue of FPI before year end! I'll be writing on December 29th from Nice!


 
ADRIAN LEEDS GROUP APARTMENTS

Welcome to your home in Paris. Home is how you will feel in a private apartment in Paris that has the "seal of approval" from Parler Paris Apartments, Paris Sharing and me, Adrian Leeds.

Adrian Leeds Group Apartments - La Sainte Catherine
Featuring La Sainte Catherine

Here's your chance to stay in an apartment dating back to 1768 with aged exposed oak beams and parquet flooring, set against lusciously-colored furnishings inspired by the Orient, superbly located in the heart of Le Marais with a view on the Place du Marché Saint-Cathérine and a block away from the famous 400 year-old Place des Vosges.

Visit Adrian Leeds Group Apartments to view our full selection or email: [email protected]

FREE one-hour consultation! Guests of the Adrian Leeds Group apartments who are considering the purchase of their own "pied-à-terre" for pleasure and profit, can take advantage of a free one-hour consultation while enjoying the apartment in the City of Light or on the Riviera. Simply complete the request form to book your consultation.


Buy and sell with French Property Insider classifieds!

Earn money. Become an Introduction Partner of French Property Consultation!

Read past issues of French Property Insider...


Facebook  LinkedIn  Twitter  |  Forward this e-mail to a friend  |  Click here to view it online
Click here to subscribe to French Property Insider

Copyright 2016 Adrian Leeds®
Adrian Leeds Group® adrianleeds.com
PAdrian Leeds® is a registered trademark in France. INPI: March 10, 2006, #063416238. Adrian Leeds Group® is a registered trademark in France. INPI: December 22, 2014, # 14/4144068. Anyone using these brand names or any kind of advertising without permission may be prosecuted. AdrianLeeds.com, AdrianLeedsGroup.com and AdrianLeedsEnterprises.com are reserved domains for exclusive use of Adrian Leeds® and Adrian Leeds Group®.