Flat vineyard sales to sparkle next year: Colliers

Flat vineyard sales to sparkle next year: Colliers
Flat vineyard sales to sparkle next year: Colliers

Prices paid for vineyards have hit rock bottom and are likely to start heading up next year, according to Colliers’ latest rural and agribusiness survey. 

The past two years have been characterised by very few sales, and where they have occurred “the sale price has represented a significant decline in value demonstrating the real impact of the downturn,” the report says.

“Property values in the wine/vineyard sector have been hit the hardest and are now well and truly at the bottom. There has been a significant amount of restructuring here and not just portfolio sell downs but demergers and consolidations,” the report says. 

“Most of this is now complete. Moving forward, the final outcome of the Great Southern Vineyard Portfolio and Cheviot Kirribilly Vineyard Portfolio sales will provide the last indication of any final adjustments. 

“This sector should re-emerge in a stronger position in 2012 as it begins to consolidate. At this time, some expansion may occur as selective institutional investors reconsider increasing their exposure to the sector.” 

According to Colliers, transactions are now being reported following 24 months of virtually no activity. 

“Demand is still strong … and with the release of some major and interesting portfolios recently … might actually return to a much stronger position by the end of the year,” the report says. 

This forecasted recovery does not hold true for south west of Western Australia, according to David Able, a rural divisional manager at Herron Todd White

He says the market for vineyards in this region has been depressed for the past two years, “and there doesn’t appear to be any light at the end of the tunnel”. 

“The massive oversupply of wine in Australia and across the world is anticipated to continue for at least the next few years and could well extend beyond this unless there are significant reductions in the number of vineyards, particularly in the cooler climate regions. 

“Any sales that have occurred have generally been forced sales and have shown no added value for the vines. In fact in many cases the vines were earmarked for removal.” Able says. 

Expressions of interest for the Cheviot Kirribilly Vineyard Property Group (CKP) 953-hectare South Australian vineyard portfolio closed mid-August, with the sale being conducted by Colliers agents Tim Altschwager and Nick Dean. Details of the sale are pending. In June 2009 Knight Frank valued the six vineyards at $42.3 million. Outcome of the negotiations have yet to result in a sale.

Altschwager and Dean are also seeking buyers for the 2,574-hectare Great Southern Vineyard Portfolio on behalf of liquidators with expressions of interest closing on November 12. The portfolio comprises 12 properties, including South Australian-based Galerita, Boh River and Sovereign in the Riverland, Woodside Ridge in the Adelaide Hills and Chapel Gate in Langhorne Creek as well as vineyards in NSW's Riverina and WA's Margaret River region.

In Geelong, Knight Frank agents Michael Hede and Leigh Morris, acting on behalf of receivers are seeking buyers for the collapsed Pettavel and Strathmore vineyards. Hede expects a price of between $5 million and $6 million for the historic Pettavel Vineyard and between $2 million and $3 million for the Strathmore Vineyard.

Prominent deals this year include: 

  • In August, San Francisco-based The Wine Group announced it would buy the 100,000-ton Loxton winery from Australian Vintage Limited located in the Riverland Wine Region in South Australia for about $27 million. 
  • Poplars Winery in the Coonawarra sold in May 2011 for $4.2 million. The property was owned by Coonawarra Development Company, which purchased the property from Fosters Group in 2007. Coonawarra Development Company went into liquidation in July last year.

  • Cockatoo Ridge Winery in South Australia’s Riverland sold for $3 million to a local investor in February, after it was placed in voluntary administration. The property failed to sell in 2009. 
  • Constellation Brands sold an 80% share of its Australian and UK business to Australian based company CHAMP Private Equity for about $290 million. Assets sold included Hardy’s Wine Company’s vineyard and winery assets.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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