Luxury hotel company Rosewood has started construction on a 63-room hotel and residence project in the historic town of San Miguel de Allende, 180 miles northwest of Mexico City. The colonial-era town, which was designated a UNESCO World Heritage Site last month, has both an historic center and a thriving art scene which have made it popular with American second home owners and tourists alike.

The property’s residential component, the Artesana Rosewood Residences, features units ranging in size from two- to five-bedrooms spread across floor plans that cover 1,800 to 7,500 square feet. Homes will have local architectural touches such as hand wrought iron details and arches carved from area limestone quarries. Outdoor spaces, featuring large patios and rooftop decks, will be an important part of the homes. Owners will be able to use the amenities at the Rosewood resort, including the spa, and secure local property management through the development.

Prices start at just under $1 million and go up to $3 million. Residences will be complete in the fall of 2010—delayed from a 2009 estimate announced earlier this year due to time spent acquiring final permits.

As San Miguel de Allende has become a destination for vacation home buyers, home prices have also risen. There are few fractional real estate options, so buyers will most likely be considering whole ownership. Homes start at $250,000 and residences close to the town’s centro are $500,000 and up. While the Rosewood residences will be among the most expensive real estate in the town, there are other multi-million dollar homes currently on the market. Some of the most expensive real estate in the city is made up of grand homes with large outdoor living spaces that are either historically significant or simply designed to echo the towns’ colonial past.