By: Ma. Soledad Gonzalez
Sales of vineyard estates in Luján and Uco Valley on the rise
The trend is leveling off and properties are being valued in dollars. Malbec is the most sought after varietal in the area of the high Mendoza river basin. And water availability is key.
Prices remained stable over the last year and now, in the aftermath of the global financial crisis, commercial real estate activities are starting to pick up. However, caution is the common denominator among those interested in investing, as they make inquiries and do extensive research before closing any deals.
“The year 2010 is comparatively better. In the current situation, we must be both cautious and realistic. A number of investment schemes that had been initiated in previous years were completed in 2009. For instance, those who embarked on long-term projects in 2007 and 2008 tried to complete the investments they had undertaken last year, so that they could get them to be profitable. Yet 2009 was a tough year, and very few investments were made, except for those that were already well underway or motivated by prior commitments. The prospects for 2010 are better, though buyers are being cautious,” pointed out Manuel Otero, winemaker and owner of the Otero real estate agency.
Santiago Debé, president of the Colegio Profesional de Corredores Públicos Inmobiliarios (the Association of Real Estate Brokers of Mendoza), said that “in 2009, the market came to a virtual standstill since, in the face of the crisis, entrepreneurs believed that the economy was going to take a dramatic downturn. Nevertheless, all those forecasts proved wrong, and when entrepreneurs saw signs of recovery, they resumed their investment activities, though of course the scenario cannot be compared to that of 2005-2007.”
Prices in dollars
Independently of the area preferred for vineyard estate investment, properties are valued in dollars.
According to sources consulted by WineSur, average prices of vineyards located in the eastern area of Mendoza range between 11 and 12 thousand dollars per hectare, depending on variables such as type, accessibility, yield, services and state of the vineyards. In districts such as Agrelo and Perdriel of Luján de Cuyo, however, prices fluctuate between 30 and 40 thousand dollars, similarly to the Uco Valley area. Availability of irrigation water is key when it comes to deciding on estate purchase, and so the chances to find land which is suitable for cultivation can become reduced.
“Estates are always valued in dollars. If we compare current prices with those of last year, we’ll come to the conclusion that on average they have remained the same, and in some cases, they have come down a little. In the premier wine region (Perdriel, Agrelo, Tunuyán o Tupungato), where demand is higher and major investments take place, prices are more rigid,” said Santiago Debé.
Manuel Otero commented that “real estate prices have stayed at the same level. In 2007 and 2008 prices increased, whereas in 2009, they stabilized, and remained stable in 2010. In some areas, prices have been adjusted though, mainly because they had lagged behind.”
Medium-sized winery wanted
Real estate brokers working with the wine industry have begun to receive requests for medium-sized wineries. Investors are interested in buying wineries in operation, with traditional machinery and an installed capacity ranging between 1 and 2 million liters.
“This market is gathering some force, though there aren’t many wineries left with those characteristics. Those who are interested in this type of property fall into two categories: grape growers who are interested in making their own wines, and companies seeking to expand their storage and production capacity by acquiring wineries which can hold those volumes of wine,” said Roberto Schaal from Contacto Propiedades.
In this regard, Otero added that “wineries with large installed capacities are being sold in areas like Maipú and Luján de Cuyo. Some are recycled as boutique wineries, and those with enough capacity to hold large volumes – such as those located in the Barrancas area – are used to produce bulk wine. Anyway, this kind of winery is scarce in the market.”
Translation: Inglés del Vino
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