Case Study: Residenza Dolce - Masseria in Cutrofiano
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Residenza Dolce Investment Case Study
Introduction
The following case study of Residenza Dolce is a hypothetical example crafted to serve as an investment template. While based on realistic data and market trends, it aims to showcase the potential returns and structure of an investment in the luxury tourism sector. It provides a model for transforming a historic property into a luxury resort, considering key financial elements, renovation strategies, and operational success.
1. Property Overview
Property Name:
Residenza Dolce
Location: Cutrofiano, Lecce, Salento, Italy
Property Type: Historic Masseria (Villa from the 1600s)
Purchase Price: €550,000
Total Area: 700 m² (commercial area)
Land Area: 15 hectares, including 3 hectares of ancient woodland
Number of Rooms: 16
Number of Bathrooms: 5
Additional Features: Small 20 m² dependance, terraces, and extensive grounds
Condition: Requires restoration but is structurally sound
2. Investment Strategy
The objective is to restore Residenza Dolce into a luxury resort, offering high-end accommodation, event spaces, and recreational facilities. It will cater to affluent tourists and event planners, leveraging its historic charm and natural beauty in the Salento region.
Key Development Features:
Luxury Suites: 10 high-end suites with private terraces
Gourmet Restaurant: Featuring Salento cuisine with indoor and outdoor seating
Event Spaces: Perfect for weddings, corporate events, and retreats
Recreational Facilities: Swimming pool, wellness center, and walking trails in the ancient woodland
3. Financial Overview
Total Project Cost
Property Acquisition: €550,000
Renovation Budget: €1,500,000
Total Project Value: €2,050,000
Investor Contribution
Minimum Investor Contribution (25%): €512,500
Funding Structure
Grant from Regione Puglia (60%): €1,230,000
Bank Loan (15%): €307,500
Investor Equity Contribution (25%): €512,500
Direct Acquisition Costs
Stamp Duty: €22,000 (4% of acquisition price)
Notary and Legal Fees: €10,000
Total Direct Acquisition Costs: €32,000
4. Development and Operation
Year 1
Renovation Timeline: 12-18 months
Soft Launch: Limited operations
Occupancy Rate: 35%
Room Rate: €350 per night
Revenue: €446,250
Year 2
Full Launch: Extensive marketing campaign and full operations
Occupancy Rate: 50%
Revenue: €630,000
Year 3
Mature Operations: Established operations
Occupancy Rate: 65%
Revenue: €819,750
Operating Costs (Annual)
Personnel Costs: €200,000
Services & Utilities: €250,000
Maintenance & Repairs: €30,000
Miscellaneous Costs: €30,000
EBITDA Projections:
Year 1: €126,250
Year 2: €275,000
Year 3: €419,750
5. Financial Summary and Exit Strategy
After five years of successful operations, the resort will be positioned for sale or continued steady income.
Projected Sale Price: €2,100,000
Net Proceeds after Loan Repayment: €1,841,250
Total Investment
Initial Equity Contribution: €512,500
Direct Acquisition Costs (Stamp Duty & Notary): €32,000
Interest Payments (Years 1 & 2): €24,600
Total Investment: €569,100
Return on Investment (RoI)
RoI Calculation:
Internal Rate of Return (IRR)
The IRR for the project is calculated to be between 25-30%, well above industry benchmarks for luxury resorts.
6. Investment Highlights
High Returns: An RoI of 223.5% and IRR of 25-30% ensure strong profitability.
Grant Funding: The €1,230,000 grant from Regione Puglia significantly reduces financial risk.
Luxury Market Demand: Growing demand for high-end tourism in Salento positions Residenza Dolce for success.
Unique Property: The historical and architectural significance of the property adds value and appeal.
Residenza Dolce offers an attractive investment opportunity in the luxury resort sector. With strong projected returns, reduced financial risk through grants, and a growing market, this project is positioned for high profitability and long-term success.
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