Craving Vintage Real Estate Investment In France

31.08.15

As a new wave of foreign investment washes over France, Laura Henderson assesses the latest craving for vintage real estate

A domaine in deepest France surrounded by bush-trained vines; somewhere that provides a decent income and gives you that elusive “quality of life”. Marketed as commercial/holiday-home hybrids, now is apparently a good time to try your hand at wine making, with estates being snapped up for a ‘relative’ song, although we’re talking upwards of £600,000 for anything halfway decent. It’s a far cry from the early days in Languedoc, when Midi vintners first began exporting barrel-size quantities of vin de table to undiscriminating traders. The quality surge from New World wines and consumer demand for a better quality tipple however, have revolutionised both the economics of the industry and the region’s real estate fortunes, poor sales of vin ordinaire forcing small-scale vignerons to sell up or face bankruptcy.

Many appellations are now upping their profile explains Martine Sahunet of Cabinet Bedin: “The Pays de Rhone has been quiet, but is now picking up. The Medoc is also active as is the Grand Libournais. We’ve had enquiries from as far a field as Canada and the States.” In the Gironde, which includes the prestigious Saint Emilion and Pomerol districts, in the past two years Chinese investors have bought upwards of 50 vineyard estates – mainly 20+ hectare estates in less prestigious areas for £1.5m-4m. Smaller estates with 3-12 hectares of vines are now selling for around £750,000, while full production vineyards of over 100 hectares start around £3.5m.

Estate values, explains Carol Young of prestige agents Bordeaux and Beyond are dictated by location, the quality of terroir and the wine produced, as well as the type of property and whether they are established producers for the wine: £500,000 is really a minimum budget for an estate, plus the finance necessary to purchase stock and operating costs for the first eighteen months. This is because the seasonal cycle from producing and harvesting to bottling generally takes that long. Operating costs can be calculated on an average of between £3,000 and £4,000 per hectare, although it takes a good three years for new vines to make decent wine.”

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One of a select few innovative projects taking shape in southern France just 20 minutes from Carcassonne is Le Domaine de La Mandoune, a restored vineyard estate developed into one, two and three-bedroom townhouses, with property owners enjoying a share in the ownership of an onsite vineyard as well as being able to participate in the winemaking process. Townhouses including furniture start from £185,000 excluding taxes.

Providing a ‘handholding service’ for newcomers, 50% of Montpellier based Vignobles Investissement’s clients are from overseas, of which 10% are British. “Most buyers get stuck in and make a go of it,” explains wine consultant Adam Dakin an old world hand, who has been in the business for over 20 years. “The main stumbling block is technical expertise, although companies like us help purchasers to source personnel, and consultants who can advise on equipment.” 20-40 hectares Dakin adds, with a vigneron’s house will set you back around £1m: “but prices can easily go beyond £4m depending on location and quality of vines.

In the Languedoc, it’s the property that pushes prices higher-in Bordeaux and Burgundy, the terroir and calibre of vines have a much greater bearing on value. Some owners may also be forced to start production from scratch, due to unsuitable machinery or poor quality vines, while others will hold out for a going concern with existing staff.”

Grape Escape Basics

  • Values for wine-producing properties have gone up 10% in the past 10 years.
  • Essential checks before buying include: a satellite survey of the vineyards, winery check for contamination and vine check for viruses. Pre-emption rights also need to be ascertained, and an application made to the Chamber of Agriculture for the authorisation to farm.
  • The purchase process can take several months but vines don’t stop growing.
  • It’s important to have an arrangement in place with the vendor to farm the estate before you officially take over. It’s worth paying a premium for an estate with good vines and an established reputation.
  • 20 hectares will make around 130,000 bottles of wine.
  • Avoid buying from or selling to wine cooperatives, or selling bulk wine. Many are struggling to compete with the quality produced in New World countries.

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