What’s putting a stopper in Chinese investments in Europe’s vineyards?
What’s putting a stopper in Chinese investments in Europe’s vineyards?
The likes of Jack Ma are toasting to luxury wine estates in France and beyond
An increasingly less rarefied set of Chinese investors are decanting, as it were, their capital to the most scenic, sprawling vineyards in Europe and North America. Yet the recent onslaught of government controls on capital flight emptying out of mainland China may dampen enthusiasm for the world’s best wine estates.
In Bordeaux, France alone, the number of chateaux under Chinese ownership has reached around 160, Decanter reported, citing data from property consultancy MSB Christies International Real Estate. However, at least two Chinese buyers have held off plans to buy in the famed wine region, pending confirmation of adequate financing, a source close to the wine-lifestyle magazine reported.
“At this stage we are waiting to see what the impact is,” Michael Bayne of Christe’s International in Bordeaux told Decanter. “It is purely speculative to discern what is going to happen, although we expect residential property to be affected more than vineyards. For the coming year, most clients have already taken their money out of the country in anticipation of this, so they are less sensitive to the new rules. If there are issues we expect to see them from 2018.”
To conserve dwindling foreign reserves, Beijing’s State Administration of Foreign Exchange announced last month that it would require foreign currency purchasers to declare that they will not be using the converted funds on overseas purchases of property, securities, life insurance, or investment-type insurance.
More: Chinese investors develop a taste for French vineyards
Alibaba founder Jack Ma acquired last year the Château de Sours in Bordeaux, with plans to create a “mini Versailles” in Entre Deux Mers. A year earlier, China-based company HBC International Wine Assets Management bought Chateau la Bastide in Languedoc.
Similar lavish transactions are playing out in Australia, Italy, and the US. In 2014, half of all Australian winery sales in 2014 went to Chinese residents, according to wine consultant Stephen Strachan. Chinese investors meanwhile made up the largest set of overseas buyers in California’s fertile Napa and Barossa valleys, Decanter reported, citing data from Knight Frank.
Capital controls or not, real estate consultants are not too anxious about an impending drought of Chinese outbound investment flows in wine-growing properties. Chinese buyers do not buy for the return on investment like wine companies, Kevin Foster, associate director of Newmark, Cornish & Carey in California, told Decanter. “They buy for prestige and typically acquire trophy properties. They account for less than 2% of the purchases both in terms of dollars and transactions for us.”
Read next: 3 essential elements of building a luxury wine cellar
Source: Property Report