WHAT'S NEW IN FRANCE

ALTERNATIVE INVESTMENTS ... French vineyards provide a unique opportunity

Author: Christopher Smith, May 2018

Here come the Americans. It is not far-fetched to expect a wave of American investments in French real estate following President Macron’s hugely successful and well-publicised state visit to the US. He is using diplomacy to put the country on the map, and the ripple eff ects will be felt in many sectors.

US software giant Salesforce’s announcement of a $2.2bn investment in France was timed to coincide with the visit, and it will have a positive impact on demand for offices and data centres. It follows similar announcements by companies like Google, General Mills and Facebook. A recent survey by the American Chamber of Commerce showed that the Macron effect has caused US investors to take a more positive view on France.

It is an easy sell now, given France’s political strength and economic recovery. GDP growth hit a six-year high of 1.6% in 2017, and it is forecast to overtake the UK in 2018 and Germany in 2019.

International investors are increasingly attracted to France beyond Paris and they are targeting the usual sectors – offices, residential, logistics – but also becoming more adventurous and looking at alternative sectors.

One notable example is the resurgence of interest in French vineyards in the last year. In the latest deal to be announced, Chateau Vieux Paquillon, a Saint Emilion 12.6 hectares estate, has just been sold to an Australian investor for over €2m. The buyer chose to remain anonymous but declared that “Australia is having a love affair with Bordeaux and its wines at the moment,” signalling that he may well be the first of many to invest in the region.

 

China’s love affair with the region has been going on for a while. The trend was started by Jack Ma, the billionaire founder of Alibaba, who bought Chateau de Sours in 2010 and now owns three vineyards in Bordeaux, and has accelerated recently. Chinese investors have acquired over 100 wine estates in the Bordeaux region, which is regarded as more open and foreign investor-friendly than other wine-producing areas like Champagne or Burgundy.

Earlier this month Chateau de Lagorce, a 68 hectares Bordeaux estate, was bought by the Chinese wine producer SCEA Degore. Chinese buyers have been snapping up the most expensive classified estates in the region and now make up 40% of all buyers.

China is on track to become the second biggest consumer of wine by 2020, drinking 6.1bn litres a year, with consumption increasing at a 40% annual rate. But buying vineyards is not all about wine: tourism prospects play a big role. New Century Tourism Group, which owns 160 luxury hotels across China and is keen to expand in Europe, has bought 62-acre Chateau de Birot and intends to develop it as a tourist attraction. With the number of Chinese tourists visiting Europe expected to soar in the next few years, more investors will be keen to exploit the synergies between vineyards and hospitality. More good news for France.

Bloomberg – France is the most hospitable country for wealth creation

Paris most sought after destination for European investors (CBRE)

M&G has bought a property in the western suburbs of Paris from NBREM and AXA for €126,5M

Novaxia has bought four supermarkets in Paris for around 100m euros

Real estate loan activity in France has risen by 37%

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