By Aaron Kessler
Herald Tribune

For nearly a decade, Shelling and his wife had stayed 10 weeks each year in a second-floor beachfront room at the Sea Castle on Siesta Key, spending lazy days overlooking one of the most beautiful beaches in the world. It was only steps to the legendary white sands and the Gulf of Mexico's smooth water that extends toward the horizon.

Shelling was lucky enough this year to snag a rental condo at a nearby property, though he said it will not quite hold the same place in his heart as the old Sea Castle -- now, no more.

Instead, a planned Hyatt beach resort is hoping to bring a new, lucrative set of vacationers to this special spot.

The $100 million, 44-unit project will be the first of its kind in the Sarasota area to be built as a so-called "fractional ownership" property: part time-share, part condo, part hotel.

The cost? Six weeks each year are yours for between $250,000 and $750,000, plus additional yearly fees.

"Though it can be viewed by the consumer as an alternative to buying a condo, it's really put together quite differently," said Larry Shulman, senior vice president of Hyatt Vacation Fractional Ownership.

Getting more for your money?

Shulman said with the average owner of a second home only using it for 21 to 47 days a year, fractional ownership provides a way to get more for your money without the hassle of year-round maintenance and the prospect of constantly renting out the place.

He said an important distinction between normal condominiums and fractional ownership is that the latter is "designed for use" by buyers.
"In a conventional condo project, there is a lot of investment angle to the purchasing, with people attempting to resell their units for a profit and who have no intention of actually living there," Shulman said.
He said people buy fractional properties generally because they love the place and want to vacation there on a regular basis.

"Rental income is incidental not fundamental, you could say," he said.
What is more, fractional ownership properties are developed differently than conventional condos -- a distinction that may be crucial to the Hyatt Siesta Key Resort's ability to move forward in such a distressed housing market.

"The typical condo project does involve significant presales," said Brent Virkus, president of Triton Companies, the developer. "But this isn't the type of development where you look for presales -- it's more of a usage decision by buyers. They really get interested when they see the thing come out of the ground."

A number of Sarasota condo projects are on ice, with several others circling the bowl. Part of the reason: Financing is extremely difficult to secure in the current environment. Lenders want to see 50 percent or more of the condo units presold before they will part with their money -- a very high bar to be met by most developers right now.

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Fractional ownership has been on the rise accross the US and Europe. In a tough market, people tend to like the fractional ownership idea more since all the costs are shared among a group of 4-10 co-owners. This can minimize the risk and reduce the upfront cost. We have seen the growing trend in the markets which we have a strong presence like NYC, London, Paris, Colorado, Italy, Cabo Mexico and Turks and Caicos of Caribbean.