You may not have heard too much about this in Kenya but it has been going on for many years in many countries. The concept of fractional ownership has been popular within the luxury segment of the property industry in developed economies for years with owners of private jets, luxury yachts and exotic properties realising that it didn’t make too much financial sense to bear the huge burden of whole ownership all alone. And this makes a lot of sense considering they would only be using their asset for a limited of the year.

Fractional ownership in the real estate sector is just that. Partial ownership of a property. Say, rather than buy a house for KES 10 million, 5 individuals can come together and buy the asset as a unit, each contributing KES 2 million to the purchase of the house. That way, while you may not have KES 10 million at hand, you can have the KES 10 million house. The catch however is that, since you only contributed a part of the money used to purchase that asset, you only own a “part of the house” and in most cases, a part equal to your contribution. Since you cannot really split a house 5 ways, one way you would get to benefit from your investment is that you get the whole house for a fifth of the year. That is why this concept is obviously only useful for a holiday home rather than for day-to-day occupation where you would remain homeless for most of the year. If the house is rented out, you would also get a share of the rental income equal to your contribution. In essence, you would  be buying shares in the house.

Details on when you get to occupy the house would vary from development to development but to illustrate, you would be guaranteed a certain number of weeks in the year in which you are free to occupy the house. Because you only have fractional ownership of the house, you cannot put up your grandmother’s picture on the wall or re-decorate the house.

Last December, the prices of many high-end hotels at the coast were as high as KES 40,000 per night in the weeks just before Christmas and after New Year's Day. For a family of four, the cost of spending a week at the coast in a five star hotel in peak season ranged from KES 300,000 to beyond KES  500,000. That is a lot by any standard.

The Baobab Development Group has come up with The African Collection, a residential development in Malindi with one bed town houses going for KES 12.7 million and two bed town houses going for KES 17.7 million. Through their sales agent Knight Frank, they have houses on fractional ownership selling from KES 1.3 million. Such developments will definitely spice up the luxury segment of our already booming real estate sector. For a fraction of the cost, you can get a piece of the action.