Bordeaux property prices plummet
- Wednesday 14 December 2005
In what is becoming a pure buyers’ market, prices in some appellations are now reaching 30% less than in 2003, and Bordeaux’s wine producers are braced for tougher market conditions in 2006, fuelling expectations that property prices will plumb new lows as small, family-run wineries are forced out of business.
‘There’s no such thing as a standard price: a property is worth the money the buyer wants to pay,’ Jean-Christophe Mau of negociants Yvon Mau said, adding that this of course does not apply to village appellations, which remain strong.
The worst-hit regions are St Estephe and the north Medoc, and Entre-deux-Mers. The situation on the right bank – St Emilion, Pomerol, Fronsac, Canon Fronsac, Montagne and other satellite appellations – is as serious. According to Mau, a good quality St Emilion grand cru classe can change hands for as little as €450,000 per hectare – down from around €750,000 in 2001.
Local solicitors and real estate agents say investment consortiums and large wine producers are circling the area, snapping up property across different appellations.
It is understood that Credit Agricole, one of Europe’s largest banks, is seeking to increase its property portfolio with vineyard holdings.
Francoise Pauly of international wine property agents Vinea Transaction told decanter.com prices were between 10% and 30% less than normal – although she added that most of their enquiries came not from companies but from private British buyers. In general, Vinea Transaction says, half of new vineyard buyers throughout southern Europe are non-residents.
As far as buyers in Bordeaux are concerned there are mixed messages. While some are using the situation to expand, others are more cautious.
Lionel Raymond, the owner of Chateau de La Garde – a successful family-run chateau which sells its stock directly to supermarkets – is using the price drop to buy more land. He cited overproduction as the reason for the amount of vineland on the market and the drop in prices.
‘The problem is [in Bordeaux] we are producing more than we are selling, because of commercial problems,’ he said.
Another producer, Thibaut Despagne of high-achieving Entre-deux-Mers estates Mont-Perat and Tour de Mirambeau, confirms the slide in prices affects only the less prestigious appellations.
‘The best terroir and the best properties have lost no value,’ he said. Despagne is a rapidly-expanding company, he added, and is always on the lookout for properties, but the land coming on the market at the moment did not interest him.
Herve Olivier, the department chief for SAFER Aquitaine Atlantic (Societe d’Amengment Foncier et d’Establissement Rural), a company that vets agricultural land transfers and sells up to 15% of the properties, said prices could keep falling.
‘They have a lot of wine in stock and we think the result at the end of the year will be very bad. It’s one year more and they (the wine producers) don’t have any more solutions to raise money,’ he said.