Case Study - Opportunity in the Tuscan hills

Borgo di Vagli

When property developer Fulvio Di Rosa bought a rundown 14th century hamlet, even he could not have foreseen how it would one day become a successful fractional resort.

The 10 detached residences in the hills of Tuscany, near Cortona, don’t offer five-star amenities and full concierge services. But as Di Rosa explains a fractional doesn’t always have to mean that kind of luxury. “Fractional ownership should be synonymous with experience not five-star service, nor does a fractional need to be branded,” he said. “Owners should be able to enjoy something which cannot be experienced elsewhere.” slice of history in the Tuscan countryside and many buy into this lifestyle. Di Rosa said: “Many people dream of owning in Tuscany and it would be almost impossible to own property here outright. “Property costs have rocketed so much that whole ownership doesn’t make economic sense any longer and fractional ownership is more desirable.

“In Tuscany in 1985 property cost €700 per square metre. This has increased to €7,000 per square metre in 2009.“The majority of people only have time to visit a property for a few weeks. This makes it economically irrational to own such a property outright, even if you have the money. “The financial logic behind sharing a property among several people and paying according to the time you want to use a holiday home is irrefutable.”

Di Rosa believes fractional ownership works well where traditional holiday property markets are saturated, availability is limited or non-existent, or where the cost per square metre is high. “Fractional owners consider the property to be their second home, not just somewhere they stay for a vacation,” said Di Rosa, who initially launched Borgo di Vagli as a timeshare resort. “Timeshare was a rite of passage to selling fractional,” he explained. “But it has shown its limitations and inflexibility. A timeshare purchaser is a different buyer who only wants one week and goes to the same apartment at the same time each year. “But fractional ownership is particularly good especially when coupled with reservation privileges. Owners can use Borgo di Vagli when they want to – like a second home.”

Di Rosa believes the keys to a successful fractional start with the right property.

He said: “If it is a restoration project you will be selling your vision of what it should be like and have to look for buyers that share the same “philosophy of life”.

“Equally important is having a trustee company to run the membership. FNTC has made the whole experience easier for us. They have removed the expense and complications of having to purchase through a notary.”

Security and flexibility are among the benefits of using FNTC highlighted by Di Rosa. He explained the part trustees play in fractional development: “It is a flexible solution compared to a condominium project, especially in Italy.

“In Italy once a fractional owner holds a title deed you would have to pursue any non-payment of annual maintenance fees through the courts. This could take many years and lead to a downward spiral, sinking the project into dilapidation. Using FNTC as trustee offers flexibility and stops this creating a problem for other owners.

“A fractional held in trust by FNTC can be repossessed for non-payment of annual dues and resold, thereby maintaining the lifeblood of the project.”