Knight Frank releases its Global Vineyard Index 2014. The index 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 US and New Zealand leading the rankings.
Key findings
• Index: The price of a lifestyle vineyard increased by 4.5% on average in the year to June 2014, down from 6.8% last year.
• Top performer: Sonoma County in the US recorded the strongest increase in vineyard prices year on-year, rising by 17.9%.
• Market focus: France and Italy are still top of buyers’ wish lists – some regions such as Piedmont in Italy have seen prices decline creating potential buying opportunities.
• Buyers: Asian buyers are looking beyond Bordeaux to the US, Italy, New Zealand and Australia.
• Grape varieties: Global demand for Sauvignon Blanc and Pinot Noir is swelling.
Asia’s investment appetite for vineyard ownership
Nicholas Holt, Head of Research for Asia Pacific, says, “The Organisation of Vine and Wine estimates that China has seen wine consumption increase by 57% 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% 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, USA.”
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.
Challenges for vineyard buyers
According to Bill Thomson, Chairman of Knight Frank’s Italian network, the difficulty for buyers is pinpointing the top locations. Bill explains, “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,” adds Bill.
On Asian buyers, Bill highlights, "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.
* Ultra High-Net-Worth Individuals (UNHWIs) is defined as someone with US$30m or more in net assets excluding their main residence.