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Feature Article from the September 2013 Magazine Issue
 
 

The Price of Prestige

Prime French vineyard properties soar while ordinary land languishes

 
by Paul Franson
 
If you’ve seen the prices that some Napa Valley vineyards have sold for, you may be aghast. But the prices of prime grapegrowing property in Bordeaux and Burgundy, France, are even more staggering.

While top vineyards in California have commanded $350,000 per acre (not counting the value of homes and wineries on the properties, or associated brands), those in Bordeaux’s top appellations can sell for $800,000 per acre (1.5 million euros per hectare). Land in France’s famed Champagne region averages about $600,000 per acre.

In Burgundy, the celebrated grand cru vineyards average more than $2 million per acre, and a few small vineyard parcels have sold for up to $16 million.

Wines & Vines recently contacted multiple sources to determine current prices for planted, producing vineyards. Property with estates, wineries and established brands can cost far more, while unplanted land is generally cheaper but very difficult to plant because of government regulations.

World’s most expensive
Vineyards in France’s top regions are the most expensive in the world. One of the leading brokers of French vineyards is Vinea Transaction. Adam Dakin, a Scot who has lived in the Rhône Valley for many years, is one of the firm’s representatives at Vignobles Investissement, an affiliate of Vinea Transaction in Languedoc and the Rhône Valley.

He represented Robert Mondavi Winery in what he called its “very sadly” failed attempt to acquire land and establish a winery in the region in southern France. He also helped Goelet Wine Estates, the parent company of Napa Valley’s Clos du Val winery, acquire a vineyard, Château de Nizas, near the southern French city of Pézenas.

Prices in greater Burgundy can range by a multiple of 100, from outlying areas to grand crus, Dakin said. “There are recent sales in Burgundy where they literally count the individual vines to calculate the value in the most prestigious crus, like 3,000 euros per vine times 10,000 vines per hectare.”

He said that Chinese buyers have bought as many as 50 lesser estates in Bordeaux during the past few years, and many are still looking. “They haven’t generally bought top estates, but generic properties.”

A Chinese buyer did buy a top estate in Burgundy. Locals were up in arms when Louis Ng, a casino tycoon from Macau, bought Chateau de Gevrey-Chambertin for an unprecedented figure of $10 million. The property contains a 12th-century building with just 5 acres of vineyards in one of Burgundy’s top appellations.

In Champagne, the few properties offered for sale are generally acquired by large syndicates from the region, according to Dakin. Likewise, in Alsace, local buyers act before the public knows property is for sale.

French investors are often interested in land near the Mediterranean coast for vacation properties, typically in the $13 million-$26 million range, notes Dakin. Many buy land to take advantage of tax laws that favor agriculture.

Prices have been volatile in France, with huge differences between results in top appellations and those in ordinary properties. Prices actually dropped in generic, little-known regions after spiking in 2000, while during the same period they exploded 10 times in the communes of Volnay and Meursault in Burgundy.

Variability within Bordeaux
Another local source is Gaëlle Perreaux, property services manager for FrenchEntrée. “Things are quite complicated when it comes to the pricing of the different vineyard areas in France. Within one wine-producing region, there are several appellations where the price of the land varies a lot even in the same area. There are also vines without appellation, which lower the average a lot.”

Here are some examples that illustrate the regional price variations, as well as some within the same area. This data is based on average prices for vineyards for sale in 2012.

Perreaux quotes prices for the Aquitaine region of France, which includes Bordeaux at $44,000 per acre for AOP (appellation d’origine protégée, formerly AOC) vineyard land. Within Aquitaine, the Gironde area averages $49,000 per acre for AOP vineyard land, while Dordogne averages $6,000 for AOP vineyard land.

“There’s a huge variation depending on the prestige of the wine the land can produce as well as the rarity of the land on the market,” she added.

For instance, in Gironde the price of vineyards for Bordeaux-appellation red wine is $8,000 per acre, but Pomerol appellation averages $484,000 for AOP Pomerol vineyard land. “That’s not even the most expensive,” she added.

Perreaux quotes averages in Burgundy of $118,000 per acre for AOP vineyard land, but within Burgundy the prices of some appellations vary widely. Grand crus (such as some vineyards in Vougeot, Chambolle-Musigny and Puligny-Montrachet) average more than $2 million per acre. 

Chablis appellation land north of Burgundy proper averages $81,000 per acre. In Champagne the average price of vineyards is about $600,000 per acre.

In southern France, the average price in Languedoc-Roussillon is $6,000, while in Provence it’s $24,000, and in the Châteauneuf-du-Pape appellation of the southern Rhone region, prices average $183,000.

Planting quotas
Leggett Immobilier is another specialist in the sale of French vineyards. Leggett’s Jane Berry is based in the ancient Bordeaux city of Saint-Émilion and heads up the specialist vineyard department. She tells Wines & Vines, “Happily, for the protection of the French wine industry, you can’t just go planting vines wherever you feel like it.”

There are two different laws, one covering “re-planting rights” (valid for eight years) and one covering “new planting rights” (two years).

“Each region has its set quotas,” she noted. “The owners must always uproot the same area of vines when they replant so production levels remain the same. Some growers simply set aside a few hectares of arable land so that when they need to replant the vines they can without going over their quota.”

She adds that a grower may buy a droit de plantation (right of planting) from a neighbor who is not using the ful l allocated quota. Planting rights are frequently traded or bought and sold on the open market.

Berry says that in certain prime areas, such as Saint-Émilion and Cognac, new planting rights are extremely rare and there is a waiting period of many years.

She adds, “The EU has recently reached agreement on new laws that should safeguard the industry until 2030. The new system will allow new vine plantings to be managed for all wine categories with a maximum increase of 1% per annum.”

Italy and Spain
Prices in other parts of Europe are not usually as high as in France. Vignobles Investissement’s Dakin quotes typical prices for appellations in Tuscany. Non-appellation vines sell for an average $11,000 per acre, Chianti for $30,000, Chianti Classico for $54,000 and Montalcino for $161,000.

In Spain, Torres, a leading wine company, passed along prices with a warning that prices of vineyards can change a lot depending on different parameters: Penedès land sells for about $16,000 per acre; land in La Rioja costs $30,000 per acre, and an acre in La Mancha costs about $8,000.

Back in California
International Wine Associates in Healdsburg, Calif., is involved in global mergers and acquisitions. Founder Robert Nicholson quoted recent sale prices in Burgundy and elsewhere and compared them with U.S. vineyard values. “In California, we have a long way to go before we have maximized vineyard values,” Nicholson said. “We are only seeing the beginning of a long upward cycle for the value of top wine estates.”

 
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