Service with un sourire

Ski accommodation in the Alps is finally moving upmarket with the creation of a fully serviced American-style resort near the Italian border. But with an 11-year lease-back scheme, is it a good investment? Cheryl Markosky investigates

Intrawest, North America's leader in developing and managing resorts, has arrived in France. Bent on overturning the somewhat tired eastern European stalag image of many of the Gallic nation's ski resorts, it is building a "traditional alpine village" of Arc 1950 at Les Arcs near the Italian border. As well as creating a "five-star site with car-free squares and cafes exuding old-world charm" – according to the blurb – the Vancouver-based company also wants to show Europeans how to run holiday resorts properly.

Lorne Bassel, Intrawest's head of development, is far too savvy to speak of Europe's shortcomings in this field in such blunt terms, but he does shudder when he recounts seeing some of the outdated and badly run concrete monstrosities that qualify as beautiful places to own a retreat in the winter, and increasingly summer, seasons. And when it comes to the word "service", he simply shakes his head in dismay.

Apartments at Arc 1950 will be larger than normal (no more squeezing several families into bunk-bedded rooms) and to a higher finish, he says. External specifications include stone houses with expensive slate roofs. "We felt it safer to do more rather than less, as there is a huge demand for luxury apartments in the Alps."

Intrawest is already a big hit in North America. The company has a good reputation for building and running resorts like Whistler and Tremblant, which offer St Moritz standards at Meribel prices. Some critics argue that the likes of Whistler can appear overdeveloped, but Intrawest says the company is building less here than it is actually entitled. "If you ignore what the site has to offer, you are just kidding yourself," Bassel says.

Arc 1950 offers 749 fully furnished apartments, with studio flats starting at £75,000 and three-bedroom apartments for £350,000 mark. Also on tap are a swimming pool, hot tub, gym, shops and restaurants. The first phase will be ready in June and the development should be completed by 2006.

Intrawest says its secret formula for success is "the 24-hour clock" management philosophy, providing residents and guests everything they will need during their stay at any time. This level of service is decidedly lacking in some European resorts and is likely to appeal to individuals and families who have left behind their student backpacking days, demanding more than inexpensive fondues and rousing midnight choruses fuelled by cheap red wine.

But is this a good investment? There is a tempting 11-year lease-back scheme where you can use your property for two weeks (one in the high season and one out of season), while it is rented out the rest of the year by Intrawest. You receive a fixed rent of 2.5% of the net purchase price and a variable rental income, depending on occupancy rates. This income is estimated to be low in the early years at only 1% to 2%, but could rise to 3% to 5% once the resort is more established. You can stay in your own property for up to seven weeks where you receive a 25% discount, but this less restrictive option means you will only receive the variable rental income.

Another bonus is that you pay no VAT, so you essentially receive a one-off 13.6% discount. This perk is being offered by the French government to boost building for tourist purposes. If you want to sell within 20 years, however, you have to pay back the balance to the French Treasury. After the 11-year term you will own the freehold just like the purchase of any other property.

If you soon tire of the glistening slopes of the Alps, you can make use of Intrawest's internal swap scheme – a rather up-market time share arrangement – whereby you can stay in similar-priced properties in places like Colorado, Vermont, West Virginia, California and Florida. As Intrawest expands, with its plans for more resorts in countries like Spain and Portugal, Bassel says his vision is for someone "to own at Les Arcs, but they can also stay in Tuscany and Switzerland".

Olivier Beumer from FPDSavills' international department, who is selling homes at Arc 1950, says 179 units have already sold, with 40 per cent of buyers coming from the UK and a considerable amount of interest from ex-pats around the globe, particularly for the larger properties. "The four-bed apartments will be launched in Paris in April and should go quickly, as people are keen to have more space." Beumer estimates prices for the four-bed units to be around €450,000 to €650,000.

In terms of investment, lower stockmarket returns are driving people to consider the alternatives, says David Moulton from Knight Frank's research department. "People do not feel confident enough to buy into the stock market and with buy-to-let overheated, they want to find somewhere to put their money. They are becoming more receptive to new ideas in Europe and if this is a good opportunity in an all-year round resort, many might want to look at it."

Moulton adds that people like to go away and have a break and will be receptive to buying into a good company with a proven track record that provides good quality resort homes. He also believes it is worth paying hefty service charges to maintain the high value of the resort.

James Barnes from Hamptons International warns that as an investment, this does not quite add up. "It could be a bit of a halfway house. You can get more than 2.5% in a bank and many don't want to be tied to being able to use their property for only a few weeks." He says Intrawest can reliably let out units for four to five months, but "will take a punt on the rest of the year".

Barnes says there are better schemes available, such as the villas and apartments at Les Jardins des Orchidèes on the Cote d'Azur, where you get a 4% return. "You let it for seven months," says Barnes, "and the rest of the year you can do what you want with it." Prices at the resort, near the Gulf of Saint Tropez, with clubhouse, tennis courts, bar and swimming pool start at just over £200,000.

Arc 1950, FPDSavills 020-7824 9030

Les Jardins des Orchidèes, Hamptons International 020-7589 8844