Is Bordeaux Bottling Trouble? China, Taiwan and Hong Kong Investors Under Spotlight
Since 2011 several high net worth Chinese investors have invested lavishly in acquiring top Bordeaux wine chateaux. But now that China’s National Audit Office has launched an in-depth investigation, trouble may lie ahead.
Rory Ramsden editor of French Property Magazine takes up the intriguing tale and its possible ramifications:
Aside from its world famous wine, there’s a whiff of controversy rising over French vineyard properties in the Bordeaux region.
Bordeaux Vineyard Property Sees Rapid Increase in Chinese Investment
Since around 2011, high net worth Chinese investors have been active buyers of France property in ever increasing numbers. Bordeaux is a top choice for this particular group, as they seem to gravitate towards vineyard properties, stud farms and other prime French real estate.
The earliest listed purchase was as far back as 1997. This was the Chateau Haut-Brisson, 13 hectares (later 16) bought by Peter Kwok of Hong Kong. This was not followed until over a decade later in 2008, when Haiyan Cheng bought the 60 hectare Chateau Latour-Laguens for an estimated €2.7 million.
There were purchases every year since then, with numbers picking up rapidly.
In 2009, three vineyards were bought by Chinese investors, namely the Chateau Richelieu (14 hectares), the Vieux-Brondeau (6 hectares in “Bordeaux Holy Land”), and the castle Lezongars (45 acres), valued at €4.2 million at the time and producing 150,000 bottles annually.
In 2010, while there was only one purchase, it the first of many by billionaire Qu Naijie who made headlines last year when Forbes estimated his net worth at more than $800 million. The chosen property was the Chateau Chenu Lafitte (40 hectares), which produces 250,000 bottles per year and was bought for around €10 million.
Qu has gone on to buying no less than 23 vineyards since then, totalling around 500 hectares. The total number of purchases by Chinese investors was up to 14 in 2011, 16 in 2012, and a jump to 36 in 2013.
Chinese Crackdown on Government Corruption
Since coming into the Chinese presidency just last March, Xi Jinping “has waged a public war on corruption,” as Wine Spectator puts it, “warning that popular disillusionment with corruption threatens the Communist Party’s hold on power.”
In its latest report, China’s National Audit Office (NAO) came out with a list of 300 possible violations to be investigated involving around 1,100 officials. Notable among the list is the aforementioned business tycoon Qu Naijie, whose conglomerate Haichang Holdings Ltd. is being questioned along with Rave Sun group.
The two companies, both based in Dalian port in China, are said to own 14 chateaux in Bordeaux and are being questioned about the expenditure of around €32 million in public funds.
Haichang Holdings Ltd. in particular has long been known in the region, holding 12 of the 14 chateaux being questioned.
Owner Qu Naijie even brought the love of French viticulture to his hometown, building a vineyard and wine museum in Dalian and organizing an annual International Wine & Dine Festival every July.
It remains unknown if the chateaux will eventually be seized.
The NAO is serious about the crackdown, with some analysts questioning whether ulterior motives are involved. Last year, the Agency succeeded in getting the life sentence for the former mayor of Dalian and party chief in Chongquing, Bo Xilai.
These corruption inquiries may shed light on the source of the funds used to buy these Bordeaux vineyard properties and conceivably result in their ultimate sale. A glut of quality chateaux vineyards all coming on to the market at the same time could drive down real estate prices. However, you should remember that Chinese investors only hold 60 of the 8,000 vineyard properties in the Bordeaux area so for the moment, the best policy is just to keep calm and carry on. It may never happen.
Story: Rory Ramsden
Republished with thanks to and by kind permission of France Property Magazine and Rory Ramsden who holds the copyright .
Rory Ramsden is the publisher and editor of France Property Magazine and has lived in France for many years. He is passionate about French cuisine and wine as well as making sure that French property buyers have the best information possible before signing on the dotted line.
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