The sale of Burgundy’s Château de Gevrey-Chambertin to a Chinese investor for $10 million has caused consternation for locals, but real estate experts in France claim it is a sign of things to come.
“They start off by buying small estates for 2 to 7 million euros [$2.5-$8.79 million] to help them understand the sector,” says Michael Baynes of Maxwell-Storrie-Baynes, specialists in selling vineyard land in the Bordeaux area.
Then, buyers move up the ladder, investing “a little more” in the second purchase. Baynes says his firm has one client whose budget tops $62.81 million, although for a grand cru “the minimum of €100 million is needed to start talking.”
Georges Haussalter, president of the Comité Interprofessionnel des Vins de Bordeaux (CIVB), says even the cheaper land deals are significant. “These purchases are of small unitary value but they include the buildings, the surrounding area, and the name [of the château] that can give them prestige in the Chinese market.”
Antoine Lam acted as an intermediary for the sale of Cognac brand Menuet to a Hong Kong-based company, Cartak. He says the firm wanted to go upmarket so it could show off to its customers by saying its product was “Made in France.”
In Libourne, Olivier Vizerie of Millésime Immobilier reports that he has completed “three sales in four months,” and has a customer who wants to buy “between 10 and 15 properties.” However, he admits that these investors “are still cautious.”
Not surprisingly, land prices are cheaper in less prestigious wine-growing areas. As a result, Chinese investors have made around 30 acquisitions in the Bordeaux supérieur appellation and in the Côte de Bordeaux since 2008. One hectare costs around $18,840 in these appellations compared to $251,000 in the more prestigious village of Saint-Émilion, or $1.25 million in Margaux.
Today, about 45 estates are owned by Belgian investors, but Chinese buyers are now in second position following a wave of acquisitions in 2011. More purchases are expected to follow as Chinese investors become less cautious.
Oenologist Li Lijuan has worked for Zhang Jinshan, founder of Chinese drinks giant Ningxia Hong, who bought the Bordeaux Château du Grand Mouëys earlier this year. She predicts that “in five to 10 years you will see the purchase of heritage properties,” which are more expensive.
The Grand Mouëys property was listed for sale at $7.4 million, but Li says that the investment is logical: the wines “are sold for 10 times the price in China.”
For now, CIVB president Haussalter declines to speak of a “rush” by Chinese buyers, insisting that “30 properties in four years out of the 8,000 that make up the Bordeaux region is still small.” However, he hopes that “this will become a lasting trend because it’s good for the profession.”
He believes “Chinese investors are the best ambassadors to their countrymen” when it comes to consolidating France’s place as the leading wine exporter to China.
Elsewhere, however, “the Chinese arrival” is not always appreciated. In the Côte d’Or, the French national land agency (Safer) tried to prevent the sale of Château de Gevrey-Chambertin to Louis Ng – a gambling tycoon from Macau – but was not able to take action, as the property was jointly owned. The far-right Front National has denounced the purchase in a media release, calling on France to “defend her treasures.”
However, Haussalter notes that in Bordeaux, foreign buyers retain the existing workers and do not touch the quality of the wines. “The investor profile is that of a successful businessman who loves wine and likes to diversify his assets,” he says.
Stéphane Defraine, president of the growers’ association in Entre-Deux-Mers, where the majority of the Chinese acquisitions are located, is also in favour of the purchases. “It is better that they buy here rather than in South America or Australia,” he says. Chinese investment will benefit the “local economy, and it is an asset which cannot be moved.”
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