Prime Property

Last week’s case on Chateau Pontet-Canet left me thinking about the exorbitant price of property in the prime wine regions of the world. The debate in class was about whether or not to sell the chateau. The arguments against selling the land were rooted in the family’s affinity to the industry and their love of winemaking. But what about the idea that the land itself is an investment worth holding onto? In light of our discussion, I thought it would be interesting to investigate the comparative prices of real estate in the prime wine regions of the world.

According to La SAFER (Société d'aménagement foncier et d'établissement rural), the agricultural governing body in France that tracks all vineyard transactions, over 9000 vineyards were sold in in France in 2017; close to a quarter of these were to foreign investors. Vineyard prices in France rose by 3.8%, with the average price per hectare of an AOP vineyard (outside of Champagne) standing at €67,500. Non AOP vineyards were far more reasonable at €13,500 per hectare, increasing by 2.2% from the previous year. Last year, Burgundy had the highest priced vineyards in France with most transactions sitting at around €5,000,000 per hectare and reaching a maximum of €12,000,000 per hectare. Champagne had the greatest concentration of expensive vineyards, with each hectare selling for upwards of €1,000,000.

While the price of acreage in the United States is yet to reach the levels of Burgundy and Champagne, Napa and Sonoma are certainly comparable with other AOP regions in France. Moreover, prices are increasing at a far greater rate than any other region in France. According to the California Chapter of the American Society of Farm Managers and Rural Appraisers, the price of acreage in Napa has increased by about 15% in the past year, and is only expected to rise.

Below I have made a table with the ranges for some of the prime wine regions in the world:

REGION	$/HECTARE (2.47 acres/hectare)
Alsace, France	Average: €124,000 Range: €50,000 - €300,000
Bordeaux, France	Average: €92,200 Range: Some appellations up to €2,000,000
Burgundy, France	Average: €5,000,000 Range: Some appellations up to €12,000,000
Champagne, France	Range: > €1,000,000
Rhone, France	Range: €14,000 - €1,000,000
Napa, USA	Range: $101,200 - $160,000
Sonoma, USA	Range: $28,349 - $101,200
Barolo, Piedmont, Italy	Range: €400,000 - €1,000,000
Cartizze, Italy	Range: Up to €1,800,000