We are finally looking forward to some sunshine after a very long, cold, wet winter. Despite all the rain, spring flowers have been in bloom since late January which is truly amazing.
This time last year the weather was glorious and there were a whopping 17 properties $3M and up, that were in escrow or had closed since January 1, 2016. Despite the rain, 14 properties priced $3M and up have gone into escrow this year or have closed. The difference this year is that 8 of those properties are priced between $6,175,000 and $18,950,000. This is a higher price range than last year by far. Big money is still finding its way to the valley and buyers are paying a premium for luxury properties and building sites, if they can find them.
Chinese investors continue to be focused on premium vineyards and wineries, as are the larger family and corporate conglomerates. The great winery sell-off began in earnest in 2015 and has continued unabated with no end in sight for the foreseeable future, in both the US and overseas. This is partly due to baby boomers wanting to retire, the implications of inheritance taxes on properties that have had substantial increases in value, an improving economy, a stronger dollar, the low cost of debt and an ever increasing consumer demand worldwide.
For premium vineyards, buyers are paying up to $700,000 an acre here in Napa Valley and $1.7M an acre in Burgundy. This of course will eventually have a trickle-down effect on the cost of wine. Chinese investors typically keep the entire winemaking and management team in place for continuity of quality and market share, and it’s usually a trophy acquisition. This is the best possible outcome for both sellers and buyers. This month’s newsletter starts out with Napa County’s 2016 Grape Crop Report.
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