The private jet is out. All hail the new status symbol, Italy property like a Vineyard in Tuscany is the new “must-have”. As the world’s elite become increasingly sophisticated shoppers looking for the ultimate experience, there’s probably no better one that owning your own vineyard and having a few friends over. Looking at recent economic recovery in Italy, and greater investment from sovereign wealth funds flowing into the region, it also looks like that’s where the smart money is going.
New Status Symbol: Investing in Tuscany Vineyards
For a while the average billionaire portfolio might have included an apartment in King’s Gate London, a yacht in Saint Barths and an East Asian resort villa like Santisook; but for many elites, run-of-the-mill trophy real estate isn’t doing it anymore, enter Italian vineyards.
Châteaux used to let middlemen négociants handle all business transactions; until Chinese demand encouraged Châteaux like Latour sell to the Chinese market directly. – insatiable Chinese demand for wino.
Beginning with a Chinese invasion of France, Chinese demand for French vineyards can be traced back to 1996 when the Chinese Premier mooted the benefits of wine and since then, Château Lafite Rothschild rather than Moutai Flying Fairy became new currency to smoother business transactions. Now their eyes turn to Italy and they are not alone.
In the 2014 Knight Frank Global Vineyard Index, the Russians led the greatest percentage share of foreigners buying vineyards in the French Bordeaux. Every fourth transaction in Provence involved Russians and interestingly, 15% of the vineyards purchased in Tuscany were made by them as well. It appears that the global elite is looking beyond Bordeaux and looking to Italian Tuscany, a result of the glamorous appeal and swagger of idyllic if not romantic Italian lifestyle.
Meanwhile, Casa in Toscana real estate agency, focused on wine-producing Chianti opined in the Financial Times that since 2013, major vineyards in the region have sold to Russian and east European buyers for between €25 million and 30 million each.
Indeed, your own commodity producing estate could very well be the new status symbol when you consider that the Kingmaker of Watches, Jean Claude Biver has been producing his own cheese since 2003 producing 250,000kg of milk and 5,000kg of the most exclusive cheese in the world for only family, friends and close business associates. (Editor’s Note: it helps that there’s nice symbolism because most farmers only became watchmakers during the off-seasons).
In fact, Diletta Giorgolo Spinola, Head of Sales at Sotheby’s International Realty in Tuscany told Financial Times that it’s no longer enough to just give out expensive bottles of wine, but that the new status symbol is to own the land and actually grow your own vino and olive oil for close relations.
Why Tuscany vineyards?
Tuscany is home to top vineyards like Brunello di Montalcino, Chianti and Bolgheri . Though tastes in home decor and design may vary but the region is a wine-making tier unto itself and attractive for reasons other than architecture; land and climate make Tuscany vineyards the ultimate business asset to own because of their ability to produce the finest grades of red wine, in essence, it becomes a commercial asset rather than mere status symbol.
According to Knight Frank Global Vineyard Index, Mendoza and Tuscany have seen the largest rises in vineyard values since 2013, recording annual growth of 25% and 20% respectively and that’s considering that when the downturn hit, prices in “entry-level” vineyards like Chianti, were selling upwards from €100,000 per hectare with prices hitting a cool half million euro when it came to premium vineyards in Montalcino.
As of 2014, China is now the biggest consumer of red wine edging out the French, even in depressed economic conditions, an “entry-level” completely refurbished and modernised 4 bedroom house in Gaiole Wine Estate in Chianti with 82 hectares of land, five of which are vineyards for top-grade Sangiovese vines (for production of Chianti Classico D.O.C.G.) sells for €3.9 million. At the upper end of the spectrum, there’s a neoclassical villa with the provenance of being owned by the Strozzi family, historic enemies of the Medicis. Weighing in with 13 bedrooms and 120 hectares including 8 hectares of Chianti Classico vineyards that produces 90,000 bottles top grade Chianti, 6 hectares for olive groves and the remainder as arable farmland, it’s selling for a cool price tag €17 million.
That said, if you’re in for a status symbol rather than playing farmer, there are many who opt for a small country house with a serviceable plot and then let the local winery tend to their grapes for a few cases of their own private label. Nevertheless, if global financial outlook continues to remain uncertain for prolonged periods, Tuscany vineyards might not only be new status symbols but also a prudent investments (as are other arable farmlands) given how market sentiments tend to seek safe havens in commodities.