Why Chinese Investors' Bordeaux Property Boom Has Just Begun

Chinese investors have only begun to snap up Bordeaux vineyards. (Shutterstock) As major French brands like Chanel slash prices in China to spur more sales and dissuade more Chinese consumers (and gray market sellers) from purchasing in France, real estate brokers in southwest France look to encourage the ongoing influx of Chinese property buyers. According to AFP, Chinese owners now hold more than 100 properties in Bordeaux, with no sign of the demand slowing even though the once red-hot China market has now cooled for Bordeaux exporters. According to realtor Karin Maxwell, "The biggest buyers [of Bordeaux properties] are Chinese and French, with each accounting for around a third of the market.” And unlike the occasionally vehement opposition to a growing number of Chinese buyers in places like Burgundy over the past few years, Bordeaux wine industry groups seem to be far more welcoming. According to CIBV Bordeaux Wine Growers’ Association head Bernard Farges, "It's reassuring. These purchases lift the profile of the Bordeaux brand and have advanced the vineyard property market, even if there are still vineyards for sale.” Despite all the press that Chinese buyers get, in reality they’re a drop in the bucket compared to entrenched buyer groups like Americans, British, and even the Japanese. Chinese owners hold just 1.5 percent of the 7,000 vineyards in the region. However, the speed with which they have amassed that 1.5 percent has astonished many in the largely sleepy region. Chinese buyers emerged as an important base only in the past six years, with purchases skyrocketing in the past three years as more ultra-wealthy mainland Chinese have sought to invest heavily in overseas property and diversify their assets. Currently, Chinese buyers make more than two dozen Bordeaux property purchases per year, a number that will undoubtedly grow in the years ahead as some, like industrialist Qu Naijie, amass larger property portfolios. Currently, Qu owns approximately 30 vineyards in Bordeaux. According to AFP, despite being a diverse group from all around China, Chinese buyers in Bordeaux display some similarities. For example, they tend to prefer properties with “noble French chateaux” with “old towers, extensive cellars, symmetrical architecture, and carefully tended gardens.” But at a certain level, most Chinese buyers in Bordeaux keep one eye on the property and the other on the China market. Amid a slide in sales of high-end French wine in mainland China hastened by Xi Jinping’s ongoing anti-corruption crackdown, many Chinese vineyard owners in Bordeaux are hoping to fight plummeting margins with industrial renovations and economies of scale. However, grand crus these wines are not—most properties held by Chinese owners currently produce lower-end labels meant for export back home. No matter the quality or name recognition, some Chinese investors are spending heavily to improve the scale and quality of the wines their properties produce. One investor, Frank Yu, has teamed up with partners to link a number of Bordeaux properties, each of which is worth anywhere from €5-15 million, hoping to replace traditional winemaking techniques with industrial efficiency to increase output and export more to China. Avery Booker is a partner at China Luxury Advisors.

Why Chinese Investors' Bordeaux Property Boom Has Just Begun

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Published March 19, 2015

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Why Chinese Investors' Bordeaux Property Boom Has Just Begun