Own a Vineyard in Argentina for $5,000 an Acre

Monday, October 05, 2009

Mendoza is the heart of the winemaking industry in Argentina

Dear Reader,

Last Wednesday, Margaret told you about the rental yields property owners were achieving in Buenos Aires. Here, you can buy a historic apartment and make a pretty good return. Six hundred miles west of Buenos Aires, there’s another real estate play that could net you a nice income. Your friends will be green with envy.

You could buy a vineyard.

Few places on earth are suitable for quality wine production. The climate and soil has to be right…and you need to have vine cultivation and wine production expertise (ideally of many generations) available locally. You also need a production and marketing infrastructure. No surprise then that an acre of vineyard in Napa Valley could set you back $180,000. In the Loire Valley, you could pay $200,000.

What might surprise you is that owning your own vineyard is within your reach. What might surprise you is that this vineyard could earn you a healthy income. What might surprise you is that you could call your own vineyard home, either year-round or part-time…the choice is yours.

If you have ever dreamed of owning your own vineyard you need to take a serious look at Mendoza…the heart of Argentina’s wine industry.

One hundred years ago, Argentina was going head to head with the US as the best place in the world. It was also set to become one of the richest. In fact, at one point it was the sixth richest country in the world. Commodities were…and still are… in abundance. Things went off track for Argentina. Today, however, Argentina could be the best country in the world…particularly if you have a very small amount of capital and have always dreamed of enjoying your own wine amidst stunning scenery…whilst collecting a healthy income.

Mendoza sits at the foot of the Andes six hundred miles west of Buenos Aires. Soil and climate is perfect here for wine production. Argentina’s wine industry began here nearly five hundred years ago. First developed by the Spanish, the French and Italians followed a couple of hundred years later. They came with cuttings and expertise from their home regions. The Italians brought Bonarda. The French came from the Bordeaux region and brought Malbec (for which Mendoza has become famous).

Today there is a third wave of pioneers setting their sights on Mendoza. They are coming from all over the globe. The reasons are simple: U.S. dollars buy 15-20 times more vineyard here than in Napa Valley. Global demand for wine and Mendoza’s Malbecs is going through the roof. The Russians and Chinese are leading the charge. Over the next four years, demand is expected to grow by 24.4% and 36.6% in these countries respectively. The BRIC (Brazil, Russia, India and China) countries’ new middle classes want to drink wine…and be seen to drink wine. Meantime, changing tastes and savvy marketing is driving demand in the US. Consumption here is growing and is expected to leapfrog France and Italy at the top of the league table by 2012.

Big label vineyards are coming…joining the small local and gringo wineries. With the bigger wineries comes wine tourism. Boutique hotels are opening up to cater for high-end wine tourists. This is good news for Mendoza. They call Mendoza “The next Napa.” The good news for you is that the real estate values here are still amazing. In fact, $5,000 will buy you an acre of raw vineyard with irrigation rights in Mendoza.

Better yet, it’s usual for small vineyards to come with a house on the property. Perfect for surveying your domain. Some even come with working wine making equipment.

Take for example an income-producing property twenty miles from San Rafael airport. This property includes 6 acres of mature Malbec vines and 6 acres of Cabernet vines planted 8 years ago. It also has 3.5 acres of d’Agen plums. The caretaker’s house has been recently renovated. Irrigation rights are in place for all vines planted. Additional water supply is available from well shared with a neighboring property. Production here in 2007 was 52,000 kilograms of Cabernet and Malbec grapes. 1900 kilograms of d’Agen plums were harvested. The asking price: $175,000.

To achieve a decent income and economies of scale you need to look to vineyards and orchards of 15 hectares or more. Your yield would increase by purchasing a neighboring property. A neighbor to the property above has an equal-sized property with a couple more acres of vines. He would be willing to sell for $170,000.

Local caretakers are available (in place in many instances in fact) and even if you live overseas, owning a vineyard in Mendoza seems manageable. If you prefer not to get your hands dirty, local co-ops will tend your grapes and produce your wine. Depending on the co-op arrangement you can get paid in cash or wine…or maybe a bit of both. If you get paid in wine, all you need to do is make sure you have suitable space for storage. Maybe you’ll want to design a label to put on the bottles you give to family and friends.

Buy a little vineyard here and you might like it so much you hope Mendoza doesn’t become the next Napa.

Ronan McMahon