Stellenbosch wine farms attract top end investors and prices

Stellenbosch wine farms attract top end investors and prices

Category News

Few can deny the allure of investing in a wine farm in the Cape, especially areas such as Franschhoek, Paarl and Stellenbosch. Pierre Germishuys, Seeff's managing director for the Cape Winelands/Boland says that demand for farms has increased over the last two years and top end farms are now selling again. The demand continues to be driven by good performance of wine and tourism industries. Over weekends, there is now an almost constant stream of people visiting the wine farms for tastings, restaurant outings or to attend one of the many festivals in the area. Germishuys says that as we now enter the warmer tourism months, the demand for wine farms is set to increase. From Stellenbosch and Franschhoek to Paarl and as far afield as Tulbagh, there is demand for wine farms. While the lower end of the price scale to around the R30 million mark remains most in demand, the last year or so has seen top end investors prepared to pay top end prices again for wine farms especially in the Stellenbosch area according to agri-agent, Andre Malan. This includes three transactions this year such as 28ha farm that sold for R54.5 million. Uva Mira, a 140ha estate located between Stellenbosch and Somerset West also for R65 million (R464 000/ha) while the 100ha Cordoba, located high up on the slopes of the Helderberg Mountain also sold for R58 million (R580 000/ha). Other recent sales in the Stellenbosch area include the 202ha Klaver Valley farm that sold last year for R96.5 million at a rate of R477 000/ha. The year before, there were also two top end sales of R40.7 million and R42.5 million for 99ha and 74ha respectively, achieving a rate per hectare of R430 000 and R550 000 respectively. While the demand is strong for top end farms, prices have remained fairly flat over the last five years, says Malan. Prices vary depending on the location, strength of the wine brand and the facilities on offer such as a hotel, restaurant and cottages. In general though, smaller boutique wine farms start at around the R20-R30 million mark while top end wine brands can sell for up to R200 million and as much as R300 million, depending on the brand, says Malan. Most of the top end farms are marketed on a very exclusive and confidential basis and not advertised. Farms in the Franschhoek valley tend to fetch the highest prices and can range to about the R1 million to R1.2 million per hectare range at the top end. Stellenbosch farms sell for about R800 000 to R1 million per hectare and for about R400 000 to R600 000 per hectare in the Paarl Valley. Historic farms tend to attract a lot of attention especially those with well-preserved Cape Dutch heritage architecture. Malan says that investors tend to seek these out for renovation and development into a top class wine brand that can then be worth several millions of rand. There are usually very few on the market. In the Stellenbosch area, there is for example just one rare find, a 62ha farm that dates to the late 1600s with its original 500sqm Cape Dutch manor house still well-preserved. It is located in the Bottelary Hills area and is already attracting significant interest with at least three serious buyers looking at it. Priced at just R17.95 million, the farm includes 40ha planted with Pinotage, Chenin Blanc, Shiraz and Merlot. The estate currently has shares in a nearby wine cellar that processes the annual grape production. It is a unique find with excellent investment potential and, says Malan, can for example easily be developed into a boutique wine brand with additional hospitality facilities. The old wine cellar is also still on the farm and although in disuse, could potentially also be renovated and restored. There are also several outbuildings including two sheds of 600sqm each, a three-bedroomed manager's house and several labourers' cottages. The farm includes excellent water sources including a dam, Theewaterskloof irrigation water and a crystal clear natural spring that feeds the main house with top quality water and no harmful chemicals. There is also Eskom electricity. The Bottelary Hills area is one of the oldest wine producing regions, established in about 1679 by Simon van der Stel. It is home to a number of well-known wine farms such as Hartenberg ('Best Shiraz, awarded in Paris in 2013), Goede Hoop, Hazendal and Kaapzicht. With the areas reachable in under an hour's drive and the Cape International Airport also in close proximity, these properties appeal not only to local buyers, but investors from across the globe. Contact Seeff Winelands/Boland agri, Andre Malan on 082 339 5651/021 886 7905, email andremalan@seeff.com, or visit www.seeff.com (web ref. 151193).

Author: Seeff