All abroad

Owning holiday properties overseas may not be as glamorous as it sounds. Given the associated administration, high maintenance costs from afar and the fact it means you’ll be taking all your future holidays in the same destination, it’s almost enough to make owning a chalet in the Swiss Alps, a villa in Tuscany or a penthouse in Paris seem an undesirable option.

Which is why investment funds that provide members with fractional ownership of, and access to, a portfolio of luxury escapes dotted around the world are on the rise.

Investing in funds like the Hideaways Club, RockSure or the Registry Collection lets the wealthy combine a penchant for a lavish leisure lifestyle with the scope for capital growth.

Founded in January 2007 by investor Helmut Schön, management consultant Stephen Wise and Fitness First health clubs founder Mike Balfour, the Hideaways Club was 10 years in the making.

Each of the founders had discovered the reality of owning a holiday home was more headache than haven. Their families tired of always going to the same destination, the houses sat unused for most of the year and property maintenance was stressful and expensive.

Frustrated with full possession they started to think about alternatives. The idea of fractional ownership of holiday homes was already popular in the United States but the trio believed an investment component was essential for the model to succeed in Europe.

An asset-backed fund that gives investors access to fully maintained villas in a variety of destinations, complete with personal concierge services, is the result.

“It’s a unique concept which combines a real estate investment with a luxury lifestyle,” Hideways Club managing director for Asia Mike Lamb says. “Members enjoy capital gains in a global property portfolio and reduced holiday costs at the same time.”

The original Hideaways fund, the Classic Collection, now comprises 33 properties in Europe, Africa, Mauritius and south-east Asia and has reciprocal rights to dozens more. The ideal ratio of investors to properties is six members for each property in the portfolio, which seems to give members the best chance of getting access to a property of choice at their time of choice.

Wealthy executives from Europe and Britain hold 70 per cent of the fund but Lamb says some Australians are members.

“We have a number of Australian investors although we haven’t actively promoted the club in Australia yet,” he says.

“We’re aware that Phuket, Koh Samui, Bali and Niseko are all top holiday destinations for Australians and we have villas in all those locations. I imagine that when we do start promoting ourselves in Australia, the interest will be high.”

Investors in the Classic Collection tend to be chief executives, lawyers, bankers and entrepreneurs in their mid-40s with young families, but Hideaways has now released a second fund of city apartments, which will appeal to a different investor.

“Because the price is a bit lower it attracts a slightly different demographic,” Hideaways chief executive Nick Bettany says. “More of the younger successful business people who can’t go on holidays for long periods of time because they’re in very intensive jobs but they really like taking city breaks to New York, Paris or Rome.”

Bettany, an investor in the fund before being named chief executive in 2010, says the City Collection also appeals to retirees who don’t usually have the larger travel parties to fill the big villas.

In both collections, unlike a time-share investment, members are entitled to pocket a return on exit, due to the fact that they own a share in the portfolio of properties as a tenant in common. Owners can sell at any time.

The bungalows, villas, and estates are typically valued at more than £1 million ($1.53 million) and would rent for up to £10,000 a week.

Each property has a minimum of four bedrooms and three bathrooms, has been decorated by interior designers, come with top-of-the-range media and appliances and are fully equipped for young children.

Depending on location, most properties have a private garden or swimming pool, and are selected for their investment potential.

The Hideaways Club offers two levels of membership, which buy investors a share in the portfolio, between two and six weeks’ accommodation a year and 80 per cent of any future appreciation of the real estate value.

A premium membership costs £250,000 in advance and £14,000 in annual fees to cover maintenance, local taxes, upkeep and the concierge service.

It is then up to the owners to decide whether to holiday in a stone villa near Tuscany, a palatial home on the island of Crete, a chalet in Val d’Isère or a loft in New York’s Tribeca.

RockSure is a similar destination club, which advertises access to “a holiday home for all seasons”.

Established in 2006, it has attracted 130 wealthy individuals to share in the ownership and maintenance of a swag of fully staffed, multimillion-dollar estates around the globe.

The real estate is bought with cash and, unlike the Hideaways Club, members buy in for a period of 10 years. Venture capitalist Anthony Hamilton bought a share in RockSure’s first fund, the Alpha, in 2007 for £159,000. It is now worth £202,000.

“I liked the concept of having someone else worrying about maintenance,” Hamilton told The Wall Street Journal. “It’s an opportunity to go to different places and it’s favourable to get a company, that’s much better at negotiating prices than I would ever be, to buy the property.”

Investors can buy a slice of RockSure’s third international villa portfolio, the Crystal Fund, for £238,000 and enjoy access to six estates, in St Lucia, Provence, Marrakesh, Corfu, the Algarve and Andalucia. The fund opened this year.

The Registry Collection is a division of the US leisure group Wyndham Worldwide and the largest luxury holiday home exchange program in the world. Its 33,000 members and some 160 affiliates enjoy hundreds of properties dotted on six continents.

From condominium hotels and high-end fractional-ownership resorts to private residence clubs and fractional-ownership yachts, members have access to a network of accommodation offerings, as well as a personal concierge service.

Another alternative for wealthy individuals looking to mix leisure with investment, but without the variety, is to buy a partial stake in a single community.

For example, Borgo di Vagli is a village of 21 architect-restored houses in Tuscany, with capacity for 100 ownerships. Rather than giving investors access to an array of destinations, the Borgo di Vagli Club appeals to investors for its peaceful and authentic atmosphere.

BRW

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