What Can You Buy in Bordeaux For 30 Million?

Reuters have reported that Chinese state-owned firms, private corporations and wealthy individuals could move into a higher price range of 10 – 30 million euros when purchasing chateaux this year.

David Guillon, of IFL, a Hong Kong based firm that sells French vineyards, castles and luxury properties told Reuters that although Chinese investors have tended to buy “smaller ticket” vineyards in the range of 2 -1 0 million euros, as opposed to institutional European and private investors who buy properties worth over 100 million euros, he expects Chinese buyers to rapidly move into a higher price range of 10-30 million euros in the coming year.

Guillon said IFL completed six multi-million euro (dollar) transactions of vineyards in Bordeaux with Chinese investors in 2011, including state-owned grain trading giant COFCO. He expects this number could double in the coming year.

COFCO (whose portfolio also includes the Chinese wine brand Great Wall) bought the 21 hectare Chateau de Viaud in Lalande de Pomerol for 10 million euros from Philippe Raoux who also owns Chateaux d’Arsac (Margaux), Lestage(Montagne Saint Emilion), Martignac(Graves) and de la Limage (Bordeaux Supérieur). The deal took 2 years to negotiate and includes the distribution of wines in China.

Raoux’s objective in selling Viaud was to enable him to concentrate on his other concerns; Château d’Arsac and his wine retail complex La Winery which is the region’s first US-style wine centre – a 64 acre wine tourism complex in Arsac-en-Médoc. Raoux’s son will be heading marketing operations for COFCO in Beijing.

Guillon also said that IFL is currently in close negotiations with two major state-owned companies, multiple private firms as well as Chinese celebrities and football players. Notably Chateau Monlot in Saint Emilion was sold to Chinese actress Zhao Wei, star of John Woo’s historical epic Red Cliff and Mulan, for 4 million euros.

According to Guillon “the demand is getting very huge and it has been a very rapid evolution.” He added that 80% of IFL’s buyers in Asia come from Hong Kong and China.

Wine industry analysts say Chinese buyers are better positioned to tap their own connections in building a lucrative sales distribution within China, a crucial advantage that foreign wine producers are not as privy to.

So what can you buy in Bordeaux for 30 million euros? The ranks of First and Second Growth Grand Crus Classe are way out of reach – Second Growth Chateau Lascombes sold for 200 million euros last year. The highest amount ever paid per hectare for a vineyard in Bordeaux was the 18 million euros paid for Chateau Carmes Haut Brion last year by Patrice Pichet.

The vineyard is only 4.7 hectares – this gives a price of 3.82 million euros a hectare (there is a chateau and a 3 hectare park to build into the price as well as the vines). When you consider that Pichet bought a chateau with “Haut Brion” in its name – and one that actually was part of the First Growth Chateau Haut Brion centuries ago – I think the high price can be explained.

 It will be interesting to see what happens as the year progresses!

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