Investors Gobbling Up Argentina’s Vineyard Parcels

 


The worlds of wine and money are colliding in Argentina’s famed Mendoza region. 
 
This past week, Bloomberg News bureau chief Dan Cancel explored the emergence of foreign investment in the region famous for its Malbec. Cancel, a financial writer, dove into the depths of real estate and investment, beginning with the insights of one of the region’s winemakers.
 
“As an autumn chill settles over the country, the harvested vineyards mottling yellow and russet, Jose Manuel Ortega’s winery rises amid snow-capped Andean foothills,” Cancel wrote. “Inside, Ortega is holding forth on why the poetry of a Malbec yields to the prose of healthy profits.”
 
Ortega is one of many landowners in Mendoza selling off pieces of their land, Cancel wrote.
 
While Argentine government-issued bonds and stocks are providing handsome returns, investors are pouring their money into Mendoza as alternative to the grapeless bonds and stocks.
 
“A secondary market has emerged for plots of Mendoza, world capital for Malbec, whose opaque purple grapes thrive at high altitudes and yield a plummy, inky wine with a smoky finish,” Cancel wrote. 
 
According to the story, Ortega’s plots of land are going for $60,000 per acre. The number may sound high, but Cancel said the price tag is cheap compared to what you’d pay for a slice of Napa Valley land. 
 
Cancel then highlighted an American investor who went to Mendoza’s Uco Valley and created the Vines of Mendoza vineyard project, where investors can purchase plots of land and start their own vineyards.
He’s invested $60 million in the 1,500 acres he owns, the story said. His land features a “luxury resort where rooms go for as much as $2,000 a night.”
 
According to Cancel, more than 75 percent of Vines of Mendoza’s plots have sold. The rush for Argentine land might be good for those selling plots, Cancel said, but it’s causing problems in certain areas of the industry.
 
“Winemakers have had to contend with import restrictions, workers’ salary demands of 40 percent annual wage hikes to meet inflation and multiple exchange rates,’ He said. “Oak barrels have been held up at customs.”
 
Despite the downside and the potential risk of investing in Mendoza’s wine-friendly earth, real estate investor Bret Rosen told Cancel the investment – compared to shares or bonds – is worth it. 
 
“As a foreigner, there’s a romantic vision of having a vineyard in Argentina,” he said. “And if the project goes sour the land will still have value, which isn’t always the case for buying company shares or government bonds.”
 

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Comments

  • If sales are so brisk at the Vines, why aren't the existing owners able to sell their properties...?

    May 05, 2015 at 5:44 PM


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