British wine regions may be in for a rise in value

Viticulture land is attracting interest from a range of buyers, sparking predictions that its value is set to rise, says CLM consultant Matthew Berryman.

The new-found momentum behind English and Welsh wine production is boosting demand for land suitable for viticulture.

Small acreages are currently changing hands – and much of that is through private sales – but the best ‘bare’ land suited to planting vines is selling for more than £25,000 per acre ($33,000; €30,000).

Alongside winemakers keen to expand, farmers looking to diversify and individuals who have made money in other businesses wishing to enter the sector are likely to increase in number.

Acquiring this land involves a bigger outlay than for other agricultural acres, with arable blocks trading for between £7,500 per acre and £15,000 per acre (£37,000 per hectare) in the southeast of England.

However, many of the factors that make quality arable land a sound investment – chiefly, its scarcity and the way it’s viewed as ‘safe’ – apply to viticulture ground.

The buoyant mood of the English and Welsh wine industry (which still only accounts for a small proportion of the total wine consumed in England but have ambitious expansion targets) is also fueling interest in grape-growing land, suggesting land values will be pushed up.

Even though this is still a relatively immature market, it’s clear there is a growing differentiation between the best and the rest. The situation is set to become more like that in France, where regions known to be to be capable of producing good quality grapes and therefore wine will command a premium.

Looking for the best

As a starting point, buyers in England seek chalky, free-draining, south-facing ground, less than 300 feet above sea level, but being situated in what’s viewed as a “fashionable” area such as Sussex, Surrey and Kent can add significant value. In terms of London-based investors, these counties provide easy access as well.

‘Picturesqueness’ is also a consideration and not solely so someone investing money can acquire a beautiful slice of the countryside (legitimate as that motive may be). There is a commercial dimension, as a scenic spot can significantly boost the returns from any tourism businesses allied to a vineyard, increasing revenue and/or the rent roll from the property.

Such allied businesses are key to the financial success of many vineyards. The public is showing an increasing appreciation of the UK countryside, more interest in the provenance of food and drink and a burgeoning desire for food and drink-related ‘experiences’, whether that’s getting married in a beautiful vineyard or taking afternoon tea in a converted barn overlooking one.

To date, most people growing grapes and making wine have looked for freehold ownership of land as they wanted control of the asset in perpetuity. But as the wine industry expands, leased ground could also be increasingly sought after.

For landowners considering renting such ground out, the lease has to be carefully drafted, recognizing the lessee’s need for a long period of occupation, but of course protecting the owner’s long-term interests. Provisions need to be included to cover every eventuality, including what might happen if the lessee wishes to exit the business.

In today’s volatile economic climate, landowners are increasingly seeking security and the prospect of a guaranteed return over a long period of perhaps 30-plus years can be an appealing one, with viticulture land often starting at £300-£400 per acre, per annum.

Remember, too, that viticulture leases often include an annual, upwards-only rent review, sometimes tied to the CPI or the RPI, unlike agricultural farm business tenancy rents that can go down as well as up (that £150 per acre, per annum you might currently be receiving for arable ground could fall if wheat prices plummet).

Figures from trade body Wine GB suggest there are about 800 vineyards in England and Wales, and that there has been a 70 percent increase in the area under vine in the past five years.

While this may still only equate to a total area of about 4,000ha, there are bullish predictions for plantings, in view of changing weather patterns. In 2018, for example, researchers at the University of East Anglia identified nearly 35,000 hectares of prime viticultural land for new and expanding vineyards – much of it in Kent, Sussex and East Anglia.

As the market for viticulture land matures, though, so we’re likely to see ever-more of a premium paid for top-notch acres. If there’s one thing I’ve learnt in my 25 years as a land consultant, it’s that if you’re looking for a sound, long-term investment, it pays to buy the best-quality land you can afford. Even if it looks expensive now, in 10- or 20-years’ time you’ll probably look back and think you picked up a bargain.

Matthew Berryman is a director of CLM, a Sussex-based firm of land consultants and rural business advisers.