Once viewed with a raised eybrow if not with downright suspicion, fractional ownership now offers possibilities that HNWs are embracing, says William Cash
AS I SETTLED back in my seat and opened my copy of the FT’s How To Spend It shortly after take-off on my BA flight from London to Nice, I had a bizarre experience. It was the second week in September and I was heading off for a week at a villa in the South of France called La Retraite, owned by the Hideaways Club, a private members’ investment club for high-net-worths who want to enjoy
‘hassle-free holidaying’ without being ‘restricted’ to the déclassé limitations of a single second vacation home.
I say ‘South of France’ rather generally because, to be honest, before boarding my flight to Nice I had no specific idea of where I was going or what I was letting myself in for. I had agreed to road-test the Hideaways Club concept and become a HNW guinea pig (ie somebody prepared to splurge £245,000 for a single Premium membership, or £166,666 for a Lifestyle membership — excluding annual costs) for a week.
I wanted to see — as I had heard through friends — whether the Hideaways Club really was an experience (and smart investment opportunity) unique from the other fractional ownership property funds and business models that have sprung up on the back of the wealth revolution of the past decade.
Before leaving, the Hideaways Club sent me various information packs and final itineraries. I ignored them all deliberately. Other than finding out that La Retraite was about half an hour’s drive from Nice airport, I knew absolutely nothing about it other than it was one of the Hideaway Club’s most ‘in demand’ properties out of a portfolio of around 50 — from Indonesia to Tuscany — from which members can choose.
Back to the FT. As I turned to read an article on the world of haute horlogerie by Spear’s own esteemed dandy Nick Foulkes, I noticed an advert opposite his article (my first thought was: do advertisers pay a premium to be placed opposite Nick’s musings?) which featured a photograph of a smiling Tim Henman and his wife Lucy drinking a bottle of nicely pale rosé by a rather swanky swimming pool. Actually, it was the David Hicks-style geometric tiling around the edge of the pool that really caught my eye.
I was suddenly seized by jealousy: now that was the sort of villa holiday I wanted. I am a fanatic for this sort of detail; any villa owner who uses the right sort of pool tiling is the sort who won’t scrimp on bathroom fittings, even if it is a second or third vacation home, and will probably be the sort who (like me) would hire a Transit van and smuggle in a Samuel Heath ‘Fairfield’ bathroom fittings range in nickel and leather across the border, rather than risk not being able to buy them locally in Italy or France.
I flicked back to Tim Henman’s grinning face as he dipped his feet into the crystalline water of the pool in the advert. ‘Whilst travelling the world, I’ve frequently thought about owning a holiday home abroad where I can take my family and friends but I didn’t want to be limited to one location or have the hassle or costs associated with sole ownership. With Hideaways Club I found the perfect answer.
DID HE SAY Hideaways Club? I read on: ‘Members of the Hideaways Club own a share in our global collection of luxury villas, set to grow to 100 and benefit from any capital growth. They become part of our exclusive club, limited to 600 full members, which gives them the flexibility of holidaying in any villa they choose and a personal concierge service.’ As a ‘Premium’ member you can stay at any of the properties for four to six weeks a year; as a ‘Lifestyle’ member, you are entitled to three to four weeks.Then I looked closely again at the ad’s small print and I saw that the villa was called none other than La Retraite. Well, well.
Under the Hideaways ‘investment’ club prices was the line: ‘Sometimes it’s smart to share.’ Or is it? This has long been a delicately loaded question in HNW circles, where the old adage ‘If it flies, floats or fornicates, it’s probably cheaper to rent’ still applies.
However much you dress any fractional ownership business up with a glossy headline like ‘A Unique Family Asset’, the truth is that the truly rich do not like to rent or share. They like to own, even if the house is shut up for eleven months a year and a full-time staff is kept on at ludicrous cost and sent Prozac to stop them going crazy from having nothing to do, and ‘owning’ for the truly rich does not mean owning an ‘A’ share (Premium) or ‘D’ share in Hideaways (Lifestyle).
What is true, however, is that with the number of global high-net-worths once again increasing, there are thousands of people for whom the attraction of joining an investment club like Hideaways is obvious. In short, it’s a lazy way to make sure that you can enjoy holidays without having to plough through endless brochures and put down fiendish deposits, while also hopefully seeing your initial investment appreciate over the course of your membership.
The club, originally founded by entrepreneurs Stephen Wise and Helmut Schön and now very much driven by chairman Mike Balfour, who started the Fitness First health-club chain, started out with around ten properties and now has around 50; ten to fifteen are added each year, with the Hideaways team using local property scouts to find the very best properties and then renovating them with all mod cons: Wi-Fi, Sky, iPod music docks, polished nickel tilting bathroom mirrors (as I was delighted to find in my villa), Asprey bathroom products and even a pair of Cornettos in the freezer.
While the efforts of companies like Botiga, which attempted to emulate the Hideaways model, failed (partly because they were trying to raise exorbitant membership fees at the height of the recession), Hideaways has the advantage of now being well established. They have also been smart in not trying to buy properties that are overpriced, or anything that could labelled a trophy villa.
It works because today’s generation of successful entrepreneurs, CEOs, divorce lawyers and bankers are the sort of people who may have already been already burned once by the experience of owning a property abroad and have woken up to the harsh reality that, far from being the stuff of bourgeois A Year in Provence dreams, the cost and time involved in owning a holiday abroad more often than not leads to angst, financial ruin and more stress than it is worth.
The fact that members actually do ‘own’ — or partly own — the properties as investors in the portfolio means that psychologically they are not in the timeshare property racket. The buyers at Hideaways have been smart in following ‘emerging’ property market patterns, moving into Asia aggressively and adding new properties in places like Mexico, Mauritius and Malaysian Borneo. (City apartments are the next phase, with properties already in New York.)
I DOUBT MANY members sign up because they are obsessive about following global property markets. At the end of the day they want somewhere to park some cash that is tangible and has a smart business model, and the exit strategy of eventually selling the fund (ie all the properties) means people are going to get their money back — at a healthy profit — and enjoy themselves at the same time.
There are some drawbacks that might make some people flinch. Once you write your cheque for £245,000, there is still £14,000 in yearly ‘associated costs’ for Premium members (paying for the concierge services and running costs of the villas) or £9,333 for Lifestyle members. (The main difference is that Lifestyle members have booking restrictions during school holidays.)
Some people might think you’d be better off spending the £14,000 on your own rented villa somewhere for a few weeks (you can have a prime four-bed villa for £10,000 a week in somewhere like Harbour Island in the Bahamas, as long as it’s not super-high season), but Hideaways insists that the sort of luxury properties it is renting out at such a high standard equates to a 60 per cent discount on market rates for similar properties.
SO WHAT WAS La Retraite actually like? As somebody who has written in these pages before on my views on fractional ownership, I have to say that the Hideaways concept is entirely viable and in a class of its own compared to other similar property investment funds.
Like making a booking at a Richard Caring restaurant, or booking a suite at a Peninsula hotel, you know what you are getting. And if you are tired of going to the same old villa and sitting next to the same Germans in restaurants in Tuscany and fancy a more exotic holiday in Croatia, or the Kalkan Heights in Turkey, or even taking a villa in Dar Lain, Marrakesh, then you can do so in the knowledge that you will be getting one of the most luxurious villas available in the region, along with a local personal concierge who knows the maitre d’ of the local Michelin-starred restaurant, or which ritzy beach club to avoid (as I was thankfully informed) after a storm because of proximity to the local sewer.
In fact, I was genuinely impressed with almost everything at the villa, except for the mosquitoes and the white leather sofa, which I know the French love (I am allergic to anything in white leather). The pool was beautiful and there were at least six different dining areas, inside and outside, as well as a wonderful maid from Glasgow who was as enterprising as the head concierge at Claridge’s.
When I realised that I was flying back on the 11am flight on 11 September, I suddenly got cold feet about the idea and wanted to stay on an extra night. (I am a terrible flier even when not flying on 9/11). Only I had a non-changeable ticket. Unless… My Glaswegian maid very efficiently called up her local doctor in Le Rouret and confirmed that my back was out and that I couldn’t fly, and even went into Grasse to fax the doctor’s orders over to BA in Newcastle. I flew back the next day. Now that is what I call service.