Timeshare resort properties have been a staple of the South African holiday landscape for many years – a way to secure a few weeks a year at your favourite getaway spot in a share-block ownership scheme. A timeshare is defined as a holiday real estate property shared by multiple owners. All the owners pay for a portion of the timeshare, meaning they each own a fractional share of the property.

As a timeshare owner, you’ll then follow a schedule that allows fellow owners to take turns holidaying in the home every year. Most popular timeshare spots are in syndicated resort developments where the real estate market is geared towards tourism and holidaymakers – often near popular beaches and coastal locations.

Timeshare in South Africa

The most recent industry study of the South African timeshare landscape, conducted by industry body the Vacation Ownership Association of South Africa in 2023, gives an insightful overview of the local investment and occupancy levels in timeshare. South Africa has around 100 timeshare resorts, located mostly in KwaZulu-Natal, Western Cape, and Mpumalanga.

Collectively, this amounts to 280,436 timeshare weeks a year, showcasing the extensive availability for timeshare owners. More than R553 million has been spent on refurbishments and maintenance in this sector over the past 2 years, and 99% of these resorts hold industry-recognised gradings from entities like RCI and the Tourism Grading Council of South Africa.

While the industry report might paint a positive picture of the sector as a business, what’s in it for you? If you’re looking to invest in a vacation property, would timeshare be a good financial option?

Pros and cons of owning timeshare

Timeshare units aren’t usually seen as investment properties. They normally decrease in value over time, depending on how well the property is maintained and changes in the area or the resort over time, neither of which you can control as an owner. If you’re looking for a holiday property that might be profitable to resell in the future, timeshare is not for you. However, timeshare has some clear benefits to weigh up against the disadvantages.

Pros

• Amenities: Timeshares usually offer various amenities like guest services, pools, and fitness and wellness centres. Research the amenities available at any timeshare you’re thinking of buying.
  
  
• Maintenance: In most timeshare facilities, owners don’t have to worry about much maintenance. You’re paying the timeshare company to handle those duties. You can simply enjoy the property while you’re on holiday, instead of trying to catch up on chores.
  
  
• Easy vacation planning: Owning timeshare guarantees your vacation booking and access to the resort facilities at an agreed time every year. Over time, you’ll become part of the holiday community and get to know the area – so you won’t have to worry about the arrangements for a new destination every time you go on holiday.
  
   

Cons
 

• Contracts: It can be hard to escape your timeshare ownership if you wish to cancel it. Subletting your timeshare weeks isn’t usually built into your contract, so trying to make back the money on timeshare weeks that you can’t use can be a problem. Study your contract thoroughly and get professional advice before you commit to timeshare, because bowing out can be costly and time-consuming.
  
  
• Hidden costs and fees: On top of a large upfront cost to buy your fractional ownership, there are usually ongoing costs and fees associated with timeshare. The only way to make a timeshare worth the money is to use the property as often as you can for as long as possible. You should also carefully check which costs and fees will be charged in the upfront contract.
  
  
• Value over time: Fractional ownership of a holiday home in a timeshare resort doesn’t typically increase in value over time. It’s more likely to decrease in value, since it’s considered an ‘illiquid asset’ – which means that you can’t turn the asset into cash easily.
   

Timeshare or holiday home?

If, instead of buying timeshare, you were to buy a holiday home, you’d have the potential to make a profit – because you own the entire property and it’s likely to increase in value. If you decide you no longer want to take vacations there, you can sell it and put money back in your pocket. With timeshare, you’re only a partial owner, so selling isn’t as straightforward or as profitable.

Your contract will make you the owner of the timeshare for a specified time and regulate the conditions under which you can sell the timeshare at the end of that time. You can’t build equity in a timeshare property. In other words, you’re not likely to generate a profit by selling it at the end of your contract. Selling your holiday home, on the other hand, is often easier and will typically generate a profit from any equity you’ve built with your home loan payments.

In addition, owning your own vacation home makes it easier to let the property to other holidaymakers whenever you’re not using it, so you can earn extra income – although you will be liable to pay tax on it. However, remember that you’ll need to employ someone to manage the property when you’re not there, so you’ll have to budget for that cost too.

You could buy a timeshare property financed with a personal loan, but before you do that, consider the pros and cons carefully. To buy a holiday home, you can arrange finance through your existing or a new home loan. The option that suits you best will depend on your needs and circumstances, so consult property and finance experts for guidance.