The widely reported wine glut and intensifying competition in worldwine markets haven’t put the brakes on vineyard investment in Western Australia’s South West wine region, particularly by those outside the state.
The widely reported wine glut and intensifying competition in worldwine markets haven’t put the brakes on vineyard investment in Western Australia’s South West wine region, particularly by those outside the state.
Asian-based Australian expatriates, interstate wine makers and ex-mining industry executives, said to be behind most of the enquiries, appear undeterred by gloomy production forecasts and a slowdown in Australian export volumes.
LJ Hooker Dunsborough, Busselton and Nannup director Brian Moulton says the demand for vineyards and wineries is the strongest he has ever seen, with most bought at full asking price shortly after listing.
The agency has sold seven vineyards in the past two-and-a-half months and has four currently on the market, including the 63.5-hectare Briarose Estate property in Margaret River for $3.2 million, and Treeton Estate for $3.1 million.
Mr Moulton said he had received strong enquiry from expats based in Hong Kong, Singapore and Dubai, and from interstate wine makers hit hard by drought and frost during the 2006 harvest.
“It’s a mixed bag of people; some are looking for semi-retirement, some have come out of the mining industry and have a lot of money to spend,” Mr Moulton told WA Business News.
And demand doesn’t appear to be waning, according to Mr Moulton. He is currently in the process of sourcing a property for two UK clients with a budget between $3 million and $5 million, and a client from Singapore who is looking to part with up to $10 million for a vineyard in the region.
“Most buyers are very particular in their requirements, in terms of type, style, price and the like,” he said.
Down South Realty director Rod Duggan said he had also received a surge in interest from overseas investors, as well as local wine producers looking to expand their operations, in the past six months.
Mr Duggan believes that there is currently more enquiry from buyers than available land.
“In the past six months there has definitely been a lot more interest [in vineyards]. A lot of it has been from overseas buyers wanting to move into the area,” he said.
“We have a lot of boutique vineyards, and a lot [of overseas investors] are looking to have a small vineyard and market their wine back to where they have come from.”
Mr Duggan expects to see more enquiry from South Australian and Victorian wine producers, who are concerned about the dwindling water supply and ongoing drought conditions in their respective states, in the coming months.
“They’re [SA wine producers] very concerned about water, and a few have been looking at investing over here in WA,” he said.
The Australian Wine and Brandy Associations’ 2006 Supply and Demand Assessment reported that a return to a desirable supply-demand balance is expected in 2008-09, on the back of two seasons of reduced yields forecast in 2007 and 2008.
The assessment also forecast that producers in some of the cooler climate regions, including WA’s South West, may take even longer to recover from the over-supply.
