WINE COUNTRY IN HOT DEMAND Wine-growing properties are in hot demand in key production areas such as Marlborough and Hawke’s Bay…and one major real estate company is tipping more interest locally, nationally and internationally 54 MAY 2016 as a sense of well-founded optimism takes hold. New Zealand wine exports reached a new high last year, with Wine New Zealand reporting a 14 per cent lift over 2014 earnings, taking the industry’s total export income to $1.54 billion. That makes wine the country’s sixth largest income earner, and Bayleys’ New Zealand says that is reflective of a growing confidence in the general horticultural and viticultural sectors. In Marlborough, Bayleys viticulture specialist Andy Poswillo says the region – now boasting 24,000ha of land in grapes - had weathered the downturn in wine sales that hit the world after the global financial crisis. Eighty per cent of the plantings were Sauvignon Blanc grapes, underpinned by major multi-national wine companies including Constellation Brands and Pernod Ricard. He was receiving regular enquiry from New Zealand and international buyers who wanted to invest in a sector that offers them the opportunity to participate in New Zealand’s growing winemaking reputation as part of their investment portfolio. “The Marlborough region is experiencing vineyard plantings the same way Southland and Canterbury witnessed a switch to dairying in the past 10 years,” Poswillo says. “We are experiencing very strong enquiry for land that is increasingly becoming more limited in supply for grape growing, as limits come in on what is available subject to suitable contour, location or water supply.” The presence of major international players in regions like Marlborough and Hawke’s Bay have opened up opportunities for investors at a landbased level to participate in the sector. “Investors are interested in buying bare land, developing it into vineyards and leasing it out to those big corporate wine companies that are actively seeking grapes for security of on-going supply,” says Poswillo. The impact of specific localities on wine characteristics mean some areas can be of interest to multiple companies seeking that grape’s characteristics for wine making. “Typically the opportunity involves setting up a vineyard and leasing it back to a company. Often these companies will seek a 25-year lease period, with review periods for that lease built in. Returns to investors can typically be about 7-8% of the land value.” Poswillo says companies will typically seek leases from larger blocks of about 20ha plus, and the security of the lease makes them an appealing investment option. For pastoral farmers with suitable areas for growing on their properties, grapes are also offering some land use options. “We have a number of clients who have subdivided off 15-20ha of land which they can offer on the market, freeing up some cash for succession or retirement. For others the opportunity to plant grapes on part of the farm provides a valuable alternative income source,” he says. To the north, despite being only a fifth of the area of Marlborough in grapes, the Hawke’s Bay is also enjoying wine’s positive prospects. Bayleys Hawke’s Bay viticultural manager Glyn Rees-Jones says faith in the region’s multi-variety potential has been especially boosted by the massive $29.3 million purchase by Delegats Group of Hopkins Farming Group’s 838ha Crownthorpe Dairy properties. The deal is to be settled in May and marks the single largest viticultural development ever done in the region. It comes as Delegats also invest in a major winery development on Everton Road, due to open later this year. Villa Maria is also expanding its Te Awa Estate Winery, adding an extra boost to the Bay’s wine industry. Rees-Jones says development opportunities in Hawke’s Bay remain promising with bare land and vineyards offering lower entry prices than Marlborough. “There is also the potential for further development in Central Hawke’s Bay if the Ruataniwha dam goes ahead. We are also seeing more interest in growing Sauvignon Blanc in the Bay, further broadening the region’s reputation for its ability to cover the spectrum of all grape varieties,” he says. Wine makers have welcomed the recent decision to protect NZ regional wine names, known as ‘geographical indications’. Along with the industry’s respected sustainability policy, this move will add to New Zealand wines being true exemplars of the ‘New Zealand story’, and a good investment opportunity, Bayleys’ New Zealand says. W I N E P R O P E R T I E S
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