Riverland vineyard prices more than triple in value as buyers look to jump on China’s wine boom
Experts say that buyers are paying up to $40,000 per hectare for vineyards in South Australia’s Riverland region. (ABC News: Tasha Impey)
Realtors say the value of wine grape vineyards in South Australia’s Riverland has tripled in the last few years as Australia continues to rapidly export product into China.
Coming off decades of drought and an oversupply of grapes in the region, potential buyers are willing to pay up to $40,000 per hectare for vines.
Stephen Strachan is the director of industry advisor group Gaetjens Langley, and said those looking to sell three years ago were lucky to reach just $10,000 for the same plot of land.
“In context, they are doing well compared to where the industry has been for the last ten or so years,” Mr Strachan said.
Riverland vineyard consultant, Ashley Ratcliff, said the remarkable turnaround has boosted farmer confidence.
“The increase in demand is seeing an increase in grape prices, which is seeing an increase in capital value of property,” Mr Ratcliff said.
“That’s obviously flowing on to people selling agricultural equipment and people are willing to spend more on shops.
“If you’re at a retirement age and don’t have succession plans for children, it is definitely a good time to exit the industry.”
China’s boom drives foreign investment
Wine exports to China have undergone significant growth in the last two years, with Australia exporting over $1 billion of wine product between March 2017 and March 2018.
Vineyard consultant Ashley Ratcliff says foreign investors are bypassing prominent wine regions in South Australia for the Riverland. (Supplied: Ricca Terra Farms)
Mr Strachan said the growth in Asia for Australian wine has helped find a home for large volumes of product.
“Australian wine exports to China grew by more than 50 per cent in the last financial year, whereas other markets are pretty static.
“What that’s done is the surplus of wine we had in Australia has essentially disappeared.
“Now we are in a situation where the supply demand is a lot healthier and on the back of that higher prices are being paid to growers,” he said.
But it is not just China driving the industry’s investment.
Mr Ratcliff said buyers from the UK are also choosing to invest in the region.
“They feel the Riverland is a good place to invest. They are bypassing places like the Barossa and McLaren Vale and coming to the Riverland.
“Being someone that’s grown up in the Barossa, I think the Riverland’s a real jewel and a great place to invest and other people are now seeing that.”
On the rebound
The Riverland region was among many communities in the Murray-Darling Basin that felt the pinch of the drought in the early 2000s.
Teamed with a glut of grape supply, Mr Ratcliff said the drought was enough to push struggling growers to exit the industry.
“During the difficult times a lot of growers were selling vineyards to get out of the industry.
Prior to the downturn, according to Mr Strachan, productive vineyards could fetch up to $60,000 per hectare.
“If you look back to the late 1990s there were some very high prices across the whole industry in Australia,” he said.
“Because of the high prices of vineyards there was quite a significant increase in plantings, but more importantly the Australian dollar appreciated.
“That made Australian wine less competitive offshore and that lead to what was an oversupply in the Australian wine industry,” Mr Strachan said.
Real estate agents have noticed an increase in foreign investment in South Australia’s Riverland. (Supplied: Kym Ellis)
The challenge now, according to realtors Colliers International, is finding enough available land to meet demand from buyers.
National director of rural and agribusiness, Tim Altschwager, said the industry optimism is making it hard to find growers keen to sell.
“With people starting to make some money they are holding on to the assets rather than putting them to market,” he said.
“Certainly the demand is there, and we have got quite a few buyers that are looking.”