The term “Hobby Vineyard” has been applied over the years to what are assumed to be luxurious houses with some fruit trees in the garden . . . that just happen to be vines. We asked our team of vineyard transaction experts from the Christie’s International Real Estate Masters Circle for their views on this asset class in their regions. All agree that the vineyard lifestyle is the most significant purchase motivation—but that criterion alone is not enough to define a vineyard asset class.
Michael Baynes from Bordeaux affiliate Vineyards-Bordeaux contends that the term hobby vineyardshould be defined by the buyers’ ability to live independently of the vineyard’s income. In other words, the vineyard is not the buyer’s primary source of income and, if it does not produce a profit, it is not a deterrent to the acquisition. Those who purchase hobby vineyards might describe the acquisition as a “passion project” as opposed to a profit play: Such owners see value in the vineyard lifestyle experience as a priority over the need to extract returns from the vineyard business. They love the idea of producing a bottle of wine and creating a direct connection with their passion and, perhaps, even proudly putting their name on the bottle.
The rustic idyll of a rural agricultural lifestyle is hugely appealing and, for someone already passionate about wine, buying a vineyard can represent the ultimate destination purchase. In all of our vineyard locations around the globe, the hobby vineyard captures this enviable lifestyle with estates typically ranging in price from US$1,000,000 to (rarely) over US$10,000,000.
Whether in Bordeaux (France); Tuscany (Italy); the Douro Valley (Portugal); Stellenbosch (South Africa); Mendoza (Argentina); Napa Valley, Santa Barbara, Oregon (United States); British Columbia (Canada); the UK; Chile; or Mexico, there are some common themes that come up in this class of vineyards:
- The vineyard estate is typically not a primary residence.
- The valuation ratio will be weighted at over 50 percent for the residence in comparison with the value of the vineyard farm, trademark, and infrastructure.
- The vineyard is often smaller in size.
- It may not have its own winery on site.
- The views and settings are usually outstanding.
- The wines are typically high quality but not necessarily with a well-known brand.
Above all, to qualify as a hobby vineyard estate, the business will not be the primary source of income for the owner.”
In the Bordeaux region, Vineyards-Bordeaux has a renovated 18th-century château with stunning views overlooking the Dordogne Valley and only 16 miles from the world-famous Saint-Émilion region, priced just under US$2.2 million.
The vineyard itself is only 5 acres (2 hectares) of the 27-acre (11-hectare) estate and all of the operational responsibilities are outsourced, including the wine making, which is done at the farmers’ cooperative nearby. Michael Baynes explains: “This is clearly what we would consider a hobby vineyard. Why? Because, with only 5 acres of vines, it would be extremely challenging to make a living from this estate—this is all about the lifestyle and wine passion rather than cash flow.”
Vineyards-Bordeaux has a handful of hobby vineyards listed in its portfolio with varying degrees of owner involvement available. “Sometimes, buyers like the idea of starting off gradually with all of the vineyard responsibilities and sales outsourced,” says Baynes. “But this can be a stepping stone, and we have seen people take a keen interest and evolve their estates into commercial operations over time.”
Another example of the hobby vineyard is in the beautiful wine region of Barcelos, northern Portugal. The estate dates back to the 17th century and includes a manor house with seven bedrooms, a caretaker’s house, chapel, housing support annexes with the potential to adapt to the construction of apartments, as well as a wine cellar and agricultural warehouses. The hobby vineyard, just under 10 acres (4 hectares), is planted with the local Loureiro grape variety. The property has a scenic, rural location, 10 minutes from the Barcelos city center, 25 minutes from the coast and beaches, and 45 minutes from Porto.
Fellow Vineyard Masters Circle expert Ricardo Alves da Costa of Luximos, an affiliate in northern Portugal and the Algarve, has observed a growing trend of clients seeking hobby vineyards in Portugal as an asset class, attractive to buyers wanting the vineyard lifestyle but also taking advantage of some of the tax benefits that Portugal offers. “Many clients have been looking for properties that allow them to interact with nature,” says Alves da Costa. “Small vineyards have been particularly popular during this period.”
Wine production began in Italy by Phoenicians and Greeks, and developed over the following centuries by the Romans. Wine and wine production have long been a serious industry and part of the Italian culture. Today, however, Riccardo Romolini of Tuscany-based affiliate Romolini Immobiliare sees a significant interest in the vineyard lifestyle.
“Purchasing a villa, a farmhouse, or a castle with a vineyard is buying a piece of our history,” Romolini says. For many, owning a property with a vineyard is a labor of love rather than an investment. “Even the most focused international investor could look beyond generating income by falling in love with a vineyard lifestyle project.” Romolini has a selection of small hobby vineyards for sale in some of Italy’s coveted DOCG wine regions, including Chianti Classico, Brunello di Montalcino, Bolgheri, and Prosecco.
And don’t forget that in case the vineyard does produce some income, there is no income tax for farming companies in Italy regardless of the business volume.”
Another unique example of the hobby vineyard phenomenon is in the Argentine province of Mendoza—one of the world’s great wine capitals. Mendoza is home to more than 1,500 wineries ranging from boutique vintners to the most important wine producers in the country. Winemakers from all over the world are drawn by the warm climate’s long days of sunshine and little rain. The climate and the global popularity of the region (not to mention the competitive costs) have created a relatively new phenomenon for vineyards in Mendoza: the subdivision hobby vineyard or the “hobby-vineyard-as-a-resort.”
In this model, larger vineyards are subdivided into 4- to 7-acre plots and sold to vineyard hobbyists who want to own a piece of the vineyard lifestyle without the overhead of a larger commercial operation. These subdivisions often partner with developers to produce a total lifestyle experience for vineyard hobbyists including resort accommodations, wine mentors, and all manner of viticulture support staff. The hobbyists in these subdivisions can often produce their own small labels seasonally, having pride in production and ownership while maintaining their day jobs in cities far from the region in the off season.
According to Fernanda Canals, president of ReMind Group in Argentina, now is the time to take advantage of significant price reductions on vineyard estates in the region. With the expansion of wine tourism and the interest in Malbec wines (the primary grape in Mendoza) there is significant opportunity to purchase larger estates and offer a viticulture lifestyle to hobbyists looking to fulfill their dreams of becoming winemakers.
Mendoza, like the rest of Argentina’s housing market, has been strongly affected by the country’s currency devaluation. Although Argentina’s economy has historically cycled through booms and busts, Canals expresses optimism about the future: “I’m hopeful that Mendoza will attract more hobbyists from around the world. Mendoza offers a unique opportunity for international buyers, especially those from the United States.” The region has a reputation as the Napa Valley of the South; however, Mendoza wine estates can be purchased for a fraction of the price of those in Napa.
British Columbia’s Okanagan Valley is the premier grape-growing region in the Canadian province—more than 84 percent of its grapes are cultivated in this sunny valley, 250 kilometers (155 square miles) by 20 kilometers wide (12 miles) long, with varying soil types and subclimates. With a drier climate than Napa and almost two hours a day more sunshine in the peak growing season, the valley’s summer temperatures can soar to 40 degrees Celsius (104 degrees Fahrenheit), while cooler evenings provide the acidity required to create good wine-producing fruit.
A relatively young wine region (its first winery was established in 1932) where small winery licenses were limited until the mid-1990s, the Okanagan Valley has opened up fairly recently to hobby and boutique vineyards. A wide range of varietals, including Merlot, Pinot Gris, Pinot Noir, Chardonnay, Cabernet Sauvignon, Gewurztraminer, Cabernet Franc, Syrah, Riesling, and Viognier, adds to the appeal of the region which invites all manner of wine enthusiasts and entrepreneurs—the small commercial winery-born-out-of-a-hobby model is very popular here.
The added proliferation of hobby farms and vineyards has become part of “the very essence of the Okanagan,” according to the New York Times. Another benefit to buying a vineyard in the region is the tax laws: Agricultural land is taxed lower than other land categories.
According to Faith Wilson, principal at Faith Wilson Group, in Vancouver, B.C., buyers in the hobby market segment are generally more local—from Vancouver, Calgary, Toronto, or the West Coast of the U.S. “These investors may already be somewhat familiar with the region and appreciate the dry, warm climate, and topography. It ultimately has nothing to do with making a profit. These buyers love the prospect of being part of the experience—it’s like having a vacation home with a twist.”
Farther south, the burgeoning wine region of Southern Oregon sees growing interest in hobby vineyards. Kendra Ratcliff, principal broker at Luxe Christie’s International Real Estate, says one of her listings there is equally attractive to the hobbyist and recreationist. Red Lily Vineyards, a 250-acre (101-hectare) estate in the Rogue Valley AVA, is an operating commercial winery, but only some 18 acres (7 hectares) are under vine. In this property there is an opportunity to convert the additional acreage into an entirely new hospitality or shared-plot venture, following the vineyard-as-lifestyle model of shared hobby projects in Mendoza. “Red Lily Vineyards is really a hybrid: On the one hand, it is a robust wine-producing operation; but on the other, the estate’s acreage and main residence makes it attractive for the enterprising individual who may dream of a turnkey venture with plenty of room for other recreational and/or entrepreneurial pursuits.”
Ratcliff observes, “Smaller, more residential hobby-vineyard listings in Oregon, such as ‘Pete’s Mountain,’ a 14-acre property near Portland, tend to sell quickly, because many buyers are simply enamored of this lifestyle. It’s no surprise these kinds of listings are fewer and farther between,” Ratcliff adds. “They fulfill so many dreams of being a gentleman—or gentlewoman—vineyardist!”