What is Time Sharing? Is such a scheme still relevant in Malaysia?

Time-sharing is a popular concept in the world of property investment, which involves dividing ownership of a property among several investors who share the usage rights for a certain period. The idea of time-sharing is not new and has been around for quite some time. However, with changing market dynamics, one may wonder whether such a scheme is still relevant in the Malaysian property investment landscape.

In this article, we will explore the concept of time-sharing and evaluate its relevance in the Malaysian market.

What is Time Sharing?

Time sharing is a property investment scheme that allows multiple investors to buy a property and divide the ownership among themselves. In this scheme, each investor gets the right to use the property for a specific period of time, usually a few weeks or months, depending on the agreement. The usage period can be fixed or flexible, depending on the terms of the agreement. Time-sharing is usually done for vacation homes or resort properties, where multiple investors can share the cost of ownership and usage.

The concept of time sharing in the property investment market first emerged in the 1980s, when property developers began to offer buyers the opportunity to purchase a share in a vacation property. This concept became popular among investors who wanted to enjoy a vacation property without the high costs of full ownership.

In the 1990s, the Malaysian government introduced the Strata Titles Act, which allowed property developers to sell individual units in a building, paving the way for the development of time sharing schemes.

Is such a scheme still relevant in the Malaysian property investment landscape?

With the growing demand for affordable property investments, time-sharing schemes are becoming increasingly popular in Malaysia. Here are some reasons why time-sharing is still relevant in the Malaysian property investment landscape:

1. Cost-effective investment: Time-sharing allows multiple investors to share the cost of ownership and usage of a property. This makes it a cost-effective investment option, especially for those who cannot afford to buy a property outright.
2. Flexibility: Such agreements are flexible and can be customized to meet the needs of investors. This makes it easier for investors to invest in a property that suits their specific requirements.
3. Hassle-free management: These kinds of schemes usually come with a management team that takes care of the property’s maintenance and management. This means that investors do not have to worry about the hassles of managing a property.
4. Diversification: It allows investors to diversify their investment portfolio by investing in different types of properties. This reduces the investment risk and provides a steady income stream.

There are several examples of time-share companies in Malaysia, including Berjaya Vacation Club, The Anantara Vacation Club, and Leisure Holidays. These companies offer investors the opportunity to own a share of a property and use it for a fixed period each year.

However, while time-sharing can be a great investment option, it is not always successful. Here are some reasons why:

1. Poor management: Time-share projects require effective management to ensure that the property is well-maintained and that the investors’ needs are met. Poor management can lead to a decline in the property’s value and investor dissatisfaction.
2. Difficulty in selling: Unlike traditional properties, time-share properties can be difficult to sell as they are often subject to restrictions on usage and ownership.
3. Legal issues: Time-share projects may be subject to legal issues, such as disputes over ownership, usage rights, or management fees.
4. Changing market dynamics: As the property market evolves, time-share projects may become less attractive to investors. For example, in a slow market, it may be difficult to find buyers for time-share properties.

While time-sharing can be a great investment option, it is important for investors to carefully evaluate the project’s management, legal structure, and market dynamics before investing. Investors must also be prepared for the potential risks and challenges associated with time-share projects. With the right research and due diligence, investors can make informed decisions about whether time-sharing is a suitable investment option for them.

Conclusion
In general, time-share investments typically offer a lower return on investment compared to traditional property investments. This is because investors only own a share of the property and have limited usage rights. Additionally, time-share properties can be subject to restrictions on usage, which can limit their rental potential.

On the other hand, time-share investments can offer benefits such as lower initial investment costs, shared management responsibilities, and the opportunity to enjoy vacation properties without the hassles of property ownership.

Ultimately, the returns on a time-share investment will depend on several factors, including the project’s management, legal structure, market dynamics, and the investor’s own goals and expectations. It is essential to carefully evaluate these factors before investing in any time-share project to make informed decisions about whether it is a suitable investment option.

FAQs:

Q. What are the risks associated with time-sharing schemes?

A. Time-sharing schemes come with certain risks, such as the possibility of the property losing value or the management team not living up to their promises. However, these risks can be minimized by doing due diligence and investing in a reputable scheme.

Q. Can time-sharing be done for commercial properties?

A. Yes, time-sharing can be done for commercial properties as well, but it is more common for vacation homes and resort properties.

Q. Is time-sharing a good option for first-time property investors?

A. Time-sharing can be a good option for first-time property investors as it allows them to invest in a property without having to commit to a large investment.