Buying a Bordeaux Chateau to Mix Romanticism and Business ; While Prices of Vineyards Fall Sharply, Interest from Chinese Stabilizes Market

By Latham, Laura | International Herald Tribune, July 13, 2012 | Go to article overview

Buying a Bordeaux Chateau to Mix Romanticism and Business ; While Prices of Vineyards Fall Sharply, Interest from Chinese Stabilizes Market


Latham, Laura, International Herald Tribune


Owning a French vineyard has always been regarded by international property investors as a status symbol, but for Chinese buyers, only a property in Bordeaux will do.

When Zhang Jinshan, founder of the Chinese beverage company Ningxia Hong, decided to sell French wine, he wanted to ensure its quality. So he bought his own vineyard.

Following a trend set by other Chinese, who have bought 20 of the 8,500 Bordeaux vineyards over the past four years, the 48-year-old businessman bought the Chateau du Grand Moueys in February. But the purchase was not purely a commercial decision.

"Chateau du Grand Moueys is extremely historic, with a big vineyard and forest," Mr. Zhang said, speaking through a translator. "It is the sleeping beauty of Bordeaux."

In addition to the romanticism attached to a 10-bedroom neo- Classical mansion and its 170 hectares, or 420 acres, of land and vineyards, there is also is the business side.

The property, which was listed at EUR 5.95 million, or $7.3 million at current exchange rates, has the potential to produce 40,000 bottles of wine a year. Ten percent of them are expected to sell in Europe, with the remainder being shipped to China for what the company says are all-but-guaranteed sales.

"The natural conditions in France are excellent; the wine here is very special. We want Chateau du Grand Moueys to become a great wine of Bordeaux," Mr. Zhang said. "We needed a chateau large enough to offer a good level of production, we also want to develop wine tourism and attract Chinese visitors."

Although still a small minority, the Chinese owners of Bordeaux vineyards have become the talk of the wine industry. Some are successful corporations that own several companies in China or Southeast Asia, while others are entrepreneurs who wanted second homes in Europe to diversify their assets. Several buyers, like Peter Kwok, a businessman from Taiwan, have given estates to their children or have installed family members and trusted employees as full-time site managers.

Owning a French vineyard has always been regarded by international property investors as a status symbol and, for most Chinese buyers, only property in Bordeaux will do.

"Bordeaux is seen as the capital of the wine-producing world," said Alexander Hall, a wine expert who also acts as a real estate consultant through his company, Vineyard Intelligence. "Private buyers who are into wine want a beautiful second home with vineyard. As a region, Bordeaux contains the top premier crus in the world and, in China, if you want to be seen as successful, you have to have the best."

Michael Baynes, managing director of the French real estate agency Maxwell-Storrie-Baynes, says most Chinese purchasers are aware that vineyard prices in Bordeaux are stagnant, so it is a good time to buy.

A chateau with a vineyard that produces a regional Bordeaux appellation wine in the Entre-Deux-Mers region of southwestern France would sell for about EUR 12,000 to EUR 15,000 per hectare today, the same amount as the lowest sale price in 2010, Mr. Baynes said.

And, he added, vineyards now selling for EUR 15,000 to EUR 25,000 a hectare probably sold for EUR 25,000 to EUR 40,000 a hectare 10 years ago.

"In terms of land, values over the past decade have been at an all-time low. It means there is a good supply of properties for sale, and prices are still quite reasonable. Interest from Chinese and Southeast Asian investors has stabilized the market," he said, adding that while prices have not yet risen, they are expected to do so within two years.

Mr. Baynes added that he now had what he characterized as 12 "serious negotiations" in progress between chateau owners and Chinese buyers. "Sales can take up to 12 months," he explained. "The Chinese like to do their research and require a lot of information. They also like to negotiate."

According to real estate agents in this market, investors usually want to pay less than EUR 10 million, with average sales to Chinese buyers at EUR 5 million to EUR 8 million. …

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