Timeshare rules may spark off a second building boom

Dubai’s fledgling timeshare industry needs to ensure that regulation is firmly in place if it is to avoid a re-run of the mis-selling scandals that dogged the sector in the 1980s and 1990s

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By  Sean Cronin Published  May 14, 2005

Timeshare developers from across the globe are closing in on Dubai where the sector is poised to take off. It marks the beginning of a new chapter in residential construction in the emirate. But industry experts warn that strict regulations must be in place to protect investors and prevent the scandals which dogged the industry throughout the 1980s and 1990s. Over seven million people worldwide own timeshare in some 6000 resorts in 95 countries. Sales volumes exceed US $10 billion annually. But the industry has been hit by scandals which saw many investors left high and dry after losing life savings on bogus projects in locations such as Marbella and the Canary Islands. One such investor is Welsh lawyer Bryn Martin, who lost more than US $80 000 on a timeshare holiday home in Lanzarote last year. He paid the cash to the now defunct Lanzarote Beach Club, which was wound up, leaving hundreds of investors out of pocket. The most high profile scam to have rocked the industry in recent years involved 55 year-old John Palmer, the so-called ‘Timeshare King’, who was sentenced to eight years in jail in 2001 for orchestrating a massive timeshare fraud based in Tenerife. With a personal wealth of US $600 million, he once ranked in 105th place on the Sunday Times’ ‘Rich List’ of Britian’s wealthiest people. Now reputable timeshare companies working in the region want to see a robust regulatory system in place to reduce the potential for similar frauds being perpetrated here. David Clifton is managing director of Interval International, which operates as a timeshare exhange forum. He says he is so “bullish” on the market in the UAE that he has relocated his office from London to Dubai. But he wants to see measures put in place to prevent the Middle East’s timeshare industry from being tarred with a negative reputation. “There are a number of international companies that are poised to come into the market in Dubai, but what they want to see is timeshare industry regulation in place so that people understand what their rights are, and so that businessmen are also protected. “The key to this is a licensing process by the government, so that there is an inability to sell more membership than there is serviced inventory.” Several timeshare-based schemes were introduced to the market at the recent Arabian Travel Mart in Dubai. Among them was a 300-apartment timeshare resort announced by Dubai Festival City. MD David Glanville-Williams, said: “We are in talks with a leading international hospitality operator to manage this large and specialised opportunity. “Timeshare is a relatively new concept within the Middle East, although well known in Europe and North America, and is one of the fastest-growing segments of the hospitality industry. “It is now a crucial element of any destination claiming to serve the needs of the entire hospitality industry. Our aim is to deliver the most exclusive timeshare proposition in the region.” The Dubai Department of Economic Development (DED) is currently drawing up plans for a regulatory framework which would open the floodgates for global timeshare operators to move into Dubai. It recently held a workshop in Dubai that was attended by 57 delegates from several major timeshare operators, including Interval and Marriott. Ali Ibrahim, deputy director general executive affairs at the DED, said: ‘The recent growth of the shared ownership real estate and hospitality sectors in Dubai necessitates the need for a regulatory framework to be in place to ensure the continued growth of the industry, while safeguarding the interests of the consumers. “This seminar is in keeping with the DED’s policy to work closely with the private sector, taking into consider-ation the specific needs of the sector, while formulating the necessary regulations.” Many of the larger residential-based projects underway in the Gulf have already been linked with timeshare operators — including the Palms, Dubailand and the Pearl-Qatar. Currently, over 35 000 Middle East residents own timeshare, of which 67% own at resorts located within the region. But this may be about to change. “Orlando and Las Vegas are super-cities with incredible critical mass for timeshare, and we believe Dubai has similar potential and could even surpass them,” says Interval International’s Clifton. “That is because Dubai does not just appeal to Americans but also to Europeans and people from the Middle East and Asia, which bodes extremely well,” he adds.

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