With the booming real estate industry, in Kenya, a new angle concept has just been introduced to the market. This concept is known as Fractional Ownership. Though the concept has taken deep roots in the western world, it is the first time that it has been heard of, and introduced in Kenya. The idea mostly targets tourist resorts and is bound to help frequent foreign tourists to Kenya to secure worthwhile accommodation during peak seasons. The tourist industry is one of Kenya’s most profitable industries, having raked an average 73.68 billion Kenya shillings in 2010.
The idea behind fractional ownership is that interested parties partly own a home at a resort, for the period they will be staying there! For instance, one can own a home for the 12 weeks they will be there during their holidays. The homes have more than one owner who all has to agree with the developer the period of time they will be using the home. These are actually complete houses, with fitted kitchens, swimming pools, in-house services, and other amenities that tourists enjoy in hotels. Owners also pay only for the period they will be at the home, after signing a long-term lease, usually for 99 years, and are free to do as they please with the home during their agreed period of ownership. They can, for instance, sublet the home. Owners can also swap periods of time with other owners. However, once an owner’s agreed period of ownership has ended, they will have to move out and allow the next period’s owner to take occupancy. This might be a downside to the concept, as the times of ownership are inflexible, forcing one to seek accommodation elsewhere if they need to extend their stay. The concept is also referred to as time-share ownership.
In Kenya, the concept has been introduced by Baobab Development Group, a real estate developer. They are optimistic that that the concept will pick up very fast in Kenya. Their first development unit for fractional ownership is currently being constructed in Malindi. The unit is almost complete and part of it has already been sold. The group is also planning to put up more units in Watamu, Lamu and Diani at the coast, as well as in Naivasha in the Rift Valley. The group is targeting people in the high income bracket, with units going for between 2.5 to 7.5 million Kenya shillings for one-bedroom and two-bedroom units respectively. Owners signing up leases with Baobab will choose among periods of 4weeks, 8 weeks or 12 weeks per year for ownership. The upside is that owners can sell these units to other people and that they will enjoy some kind of protection from fluctuating real estate prices in Kenya for the lease period of 99 years; prices which have been increasing dramatically in recent years. How deep the roots of this concept sets on Kenyan soil real estate can only be left to time, and the machinations of the market in promoting the concept.