Buyers and investors are not only looking at overseas properties, with more Asians including those from mainland China, Hong Kong, South Korea and Vietnam buying vineyards around the world.
Knight Frank Asia Pacific, in its Global Vineyard Index, recently noted how prices of lifestyle vineyards increased by 4.5 percent on average in the year ending June 2014, down from 6.8 percent last year.
The index, which tracks the change in the price of ‘lifestyle’ or ‘boutique’ vineyards, records another year of solid growth in vineyard values, with wine-making regions in the United States and New Zealand leading the rankings.
The Index also noted the top performer was Sonoma County in the U.S., which recorded the strongest increase in vineyard prices year on-year, rising by 17.9 percent. France and Italy are still top of buyers’ wish lists, while some regions such as Piedmont in Italy have seen prices decline creating potential buying opportunities.
Vineyard investments (up by 4.5 percent) outperformed wine (up by 3 percent) in the year to June, but both were eclipsed by classic cars which shot up by by 25 percent.
Interestingly Asian buyers are now looking beyond Bordeaux to the U.S., Italy, New Zealand and Australia for their vineyard investments.
Kate Everett-Allen, Partner, and International Residential Research, said: “Despite the slower rate of growth, the proportion of wine regions that recorded positive price growth increased from 60 percent in 2013 to 79 percent in 2014.
“The global picture hides some notable standout performances, particularly amongst wine-making regions in ‘new world’ locations such as the U.S., New Zealand and Argentina. The average price of a lifestyle vineyard in the new world rose by 6.2 percent year-on-year compared to only 2.3 percent in the established markets of the old world.”
Nicholas Holt, Head of Research for Asia Pacific, added: “The Organisation of Vine and Wine estimates that China has seen wine consumption increase by 57 percent between 2000 and 2013. The growth in Chinese appetite for wine is not only being echoed by a significant increase of imports into the country, but also by a rise in interest in vineyard ownership overseas.
“Knight Frank’s attitudes survey, which analyses the views of wealth advisors around the world, revealed that 45 percent of Chinese UHNWIs* were interested in vineyard ownership – the highest of any country surveyed. This interest is being translated into deals around the world, with Chinese investors notably the most significant foreign buyers in Barossa Valley, Australia; Bordeaux, France; and Napa Valley, U.S.”
Only two or three years ago any reference to Asian buyers was synonymous with the Chinese but now it refers to a much broader mix of nationalities from Vietnamese to South Korean as well as the ubiquitous Hong Kong wine enthusiasts, Holt concluded.
According to Bill Thomson, Chairman of Knight Frank’s Italian network, the difficulty for buyers is pinpointing the top locations.
Thomson explained: “Wine, unlike almost any other agricultural product is very location sensitive and therefore within each area there are hundreds of micro areas that are better or worse. Real local knowledge and research is the only answer.
“The complexity of wine is that heavy investment in areas can lead to oversupply with all the players reacting in the same direction,” he added.
Asked whether buyers are willing to look outside the prime locations to get a better deal, Bill explained: “Buyers, be they domestic or foreign, are often willing to look beyond the key areas if their focus is primarily on the property and the vines are a lesser priority. However, if profitability is key, we will always advise them to buy in the areas where the wine will be easier to sell.”
On Asian buyers, Bill highlighted: “The purchase of western wine estates for Chinese and Asian buyers is a relatively new trend. As is the case with such trends, we are seeing a limited number of market leaders exploring the options and some high profile investments in prime locations with indisputable heritage.
“’When in doubt, buy the best you can afford’ seems to be the clear strategy here. Since wine is such a subjective commodity, this is not an area where the first investors are going to be looking at taking a chance in unproven and uncategorised newer wine areas.”
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg