The Wine Country Lifestyle: Expensive

    The price of a residential piece of real estate may be falling, but you’d never know it out among the vines in California’s Napa Valley.

     The demand for Napa County vineyard land is strong, and the future looks even brighter, according to industry observers.

     David Freed is chairman of UCC Vineyards Group, a firm that specializes in vineyard property sales and owns vineyards from the Sacramento Delta to Santa Barbara. He told the St. Helena Star that he can look back at the past 10 to 15 years of transactions and count the number of vineyard foreclosures on one hand.

     ‘Because of the scarcity of property in Napa, the sellers are in control,” Freed said. “I know of a property on Zinfandel Lane that was on the market for two years because the seller wouldn’t budge on his price. He recently got his price.”

     Umpqua Bank’s Steve Kattner, senior vice president of the wine specialty group, said he is not seeing any crossover from the housing market.

     “I don’t see things slowing down… barring some sort of agricultural disaster,” he said.

     Tom Jordan makes his living assessing vineyard properties in Napa, as principal of Associated Services Appraisal. Jordan said that when he started in 1974, no one paid $10,000 for an acre of vines. Now, prices start at about $100,000 per acre, and in some cases reach more than three times that amount.

     In many ways it’s Economics 101: Demand is outstripping supply.

But the economics also are driven by forces beyond the composition of the soil and the quality of the sunlight that strikes the land. Large numbers of investors and wealthy individuals have long looked to own a piece of the wine country dream.

     Tony Correia, president of Correia-Xavier Inc., an appraisal service in Sonoma, said Napa Valley’s global reputation keeps the market vigorous.

     “For many of us in my industry, this is an adult Disneyland,” he said. “It is a unique market with extraordinary capital and very savvy players for a limited supply of property.”

     Jordan said some of the really big players actually don’t want the vineyards; they’re in it for the brand. They sometimes acquire large pieces of property that come with a wine brand, then sell off the land and buy grapes for their wines.

     While residential brokers take out listings in newspapers and plant signs on lawns, and commercial property brokers post billboards on available sites, vineyard deals often are transacted quietly, without much obvious fanfare.

     “If we want to buy, we often hear about it over the fence,” Freed said. “Many vineyard properties don’t come to the marketplace. You have to get right on it. It’s a very tight market here.”

     Jordan said he has heard of 10- to 15-acre “lifestyle” parcels fetching up to $300,000 per acre.

     Julie Nord of Nord Coast Vineyard Services estimated that developed Cabernet Sauvignon vineyards in the mountains can fetch $300,000 per acre, while on the valley floor, prices are in the $175,000 to $200,000 range.

     In the areas of Rutherford Bench, Howell Mountain and Oakville Bench, vineyard real estate can hit $400,000 to $500,000 per acre. Property transactions on those sites often include a wine label, inventory, mailing list and/or a crush facility.

Posted in Wine Region Profiles
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