Thinking of buying a vineyard in South America. Read this first
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The one consolation of investing in a vineyard and losing your money is at least you can drink the wine – or so the old adage goes. But with meager returns from savings, and stock market investors chastened by the crash of 2007-2009, more people are looking for creative investments.
According to property the firm Knight Frank, interest in International vineyards has gathered pace over the past five years despite the price of International vineyards falling in 2010 and 2011. Bordeaux and Dordogne dropping by 14% last year and 18% in Montalcino, Italy. New-world regions showed a similar trend, falling by 23% in Hawke’s Bay, New Zealand, and 25% in the US’s Napa Valley. It is the same story in South America.
GTSA says there is money to be made if buyers are willing to work hard. “Although there are those who want to retire to a beautiful place, surrounded by vines, the vast majority still dream of making money,” they explain. “It is essentially farming … after the initial investment there is the cost of harvesting, making and bottling, and legal costs.”
It takes a good 10 years to establish a vineyard and put your own stamp on it. The shortest investment is three years – that is how long it takes a bottle of red to mature.”
GTSA warns potential buyers not to let the romance overcome the reality. To make a profit vineyards need to produce between 40,000 and 50,000 bottles per year.
GTSA says investors should visit a vineyard with an expert. “People need to have savings behind them as wine takes time to mature. Whatever your budget, don’t spend it all on the vineyard – keep some money in reserve.”
The increasing number of managed shared-ownership schemes by international developers offer cheaper access to vineyards. There is a number for example in the Mendoza, Tupungato and Tunuyan Argentinian triangle giving wannabe vintners the opportunity to get involved in all aspects of wine making.
An hectare on a shared-ownership development in the Mendoza wine valley costs upwards $120,000 USD, although buyers are advised to investigate the land value per hectare and remember there may be a management fee.
Carlos Troconis, real-estate adviser at GTSA – Mendoza, urges people to visit the area, even spend time getting to know the locals. He says: ” Wine-lovers and retirees love the fact that the vineyards are on their doorstep You need to love the region if you are going to invest in it – the villages, the people and, of course, the wine.”
Contact the Gateway to South America team to learn about the best investment opportunities in the region. The company is a benchmark for foreign investors wishing to invest in Argentina, Brazil, Chile, Paraguay, Peru and Uruguay, providing expert advice on property acquisition and investment tours. #adp02
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