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Will a Chinese Investor Buy a First-Growth Château?

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China may be importing less Bordeaux wine, but Chinese investors are still looking for Bordeaux châteaus to buy. Three Bordeaux châteaus have recently sold to Chinese investors, and more acquisitions are underway. The wineries are seen as safe, sophisticated investments for both industrial conglomerates and tycoons, say experts. “To own a château is as big a trophy asset as it gets,” said Rupert Hoogewerf, founder of the Hurun Report, which tracks the wealth and habits of China’s superrich from offices in Shanghai.

A Bordeaux real-estate agent agrees. “A château is a new way to show you are wealthy without looking like a nouveau riche—they don’t want that image in China,” said Li “Lily” Lijuan, who works for realtor Maxwell Storrie Baynes, the Christie’s affiliate in Bordeaux.

According to Li and others, Bordeaux remains the prime target of Chinese investors looking to buy a foreign winery. “In Burgundy it’s harder to find an estate, and [clients] believe more in Bordeaux,” said Li. “Bordeaux is more open to foreigners, and it’s easy to resell the estate. They ask for St.-Emilion first—it’s very famous.”

Most Chinese acquisitions have been modest estates, but many predict that will change as soon as an opportunity presents itself.

“We have Chinese investors who are ready to put hundreds of millions of euros on the table. If a first-growth goes up for sale, if Margaux or Cheval-Blanc goes up for sale, the Chinese will be right in front,” said Hervé Olivier, regional director of SAFER, the French property and rural development agency.

Maxwell Storrie Baynes recently completed two transactions; both of the buyers are on Huron’s rich list. Chen Miaolin, worth a reported $1.1 billion, bought Château de Birot in the Cadillac Côtes de Bordeaux appellation from the Fournier-Castéja family. Eric Fournier’s son Arthur will continue to manage the estate, which has 60 acres under vine.

Chen owns the largest private luxury hotel group in China, Zhejiang Kaiyuan or New Century Tourism, and recently bought Hotel Château d’Esclimont near Versailles. He decided to invest in Bordeaux after leading a senior cycling team on the Tour de France route in 2011. “He saw the vineyards and decided he wanted the French lifestyle,” said Li.

He visited 20 châteaus before buying Birot, and intends to buy two or three more. His wine is already well-known in China since he launched a design contest for a new label.

Li also closed the recent acquisition of 20-acre Château Renon in Côtes de Bordeaux by Zhou “James” Yunjie, the owner of ORG packaging and worth a reported $1 billion. Zhou also imports wine and bought Sunshine Creek winery in Australia’s Yarra Valley in 2008. He is a member of the St.-Emilion Jurade.

“He knows a lot of people in Bordeaux. At first, he just wanted a vacation house,” said Li. The 19th-century mansion was renovated in 2002 by an expert in Feng Shui. It also includes 16th-century cellars and stables.

In the Médoc, 74-acre Château Preuillac was sold to an unknown Chinese investor who already owns two other châteaus, according to local sources. The Mau and Dirkswager families decided to sell following two years of disastrously low yields.

Olivier told Wine Spectator two more transactions with Chinese buyers are underway. “There’s one in Fronsac and one in the Médoc. They aren’t well-known châteaus but the terroir is interesting and they weren’t facing any competition.”

International banks have facilitated investments, extending credit against assets in China, but offering a lower interest rate in France.

While the learning curve of Bordeaux real estate was steep at first, Chinese investors are gleaning tips from the growing Chinese community in Bordeaux. “The investors are increasingly professional and they know the classification. It’s a long-term investment,” said Li. “The vines make their best wine when they’re 20 years old. In China, in 20 years—or less—[officials] could decide to build a school on your vineyard. Bordeaux is a stable investment environment for the Chinese.”

Suzanne Mustacich

Posted: March 12, 2015

Wine Spectator

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