Despite the economic downturn in recent years, the demand for wine and lifestyle farms in the Cape Winelands remained consistent, with a number of big-ticket sales and high-profile deals confirming the region’s attraction - and the keen local and foreign interest looks set to continue post-lockdown.
“Foreign interest increased on the back of the weakening Rand and dwindling investment opportunities in Europe amidst the growing global economic turmoil,” says Chris Cilliers, CEO and Co-Principal for Lew Geffen Sotheby’s International Realty in the Winelands.
“During the past five years there’ve been several high-profile deals in the region, including a record-breaking partnership we brokered between Ernie Els Wines and a private German investor, realising one of the highest prices ever achieved for a wine farm transaction in the Western Cape.
“The pandemic and subsequent travel ban has probably hampered the agricultural sector most as a virtual tour of a farm is not quite as illuminating as a video viewing of a house so, although we were still receiving a steady stream of enquiries, no deals were concluded during lockdown.”
Tobi Retief, Agricultural Specialist for the group, says that over and above the queries about smaller lifestyle farms from predominantly European investors, there is also currently a strong demand for large commercial farms in the export-fruit industry.
“This is largely from successful farming operations wanting to expand, particularly in the citrus- and table grape industry, where wine-and irrigation farms are acquired to be redeveloped as export fruit farms. Essentially, large farms with a sustainable source of irrigation water are highly sought-after.
“Most of the current sellers are family-owned single operation farmers, especially where there is no contingency in terms of the next generation taking over.”
Partner Agricultural Specialist, Danie Hauptfleisch adds that the increased interest in smaller lifestyle farms can be attributed to the realisation that there are, in fact, opportunities to work from home, while staying in an idyllic rural environment.
“Sustainable food security is also a strong motivation for local buyers, with cash investors keenly focussed on value propositions.
“And with agriculture being a long-term investment, droughts or other difficulties may temporarily hamper returns but do not have a lasting impact on eventual returns.”
However, whilst realistically-priced farms with fertile soil and sufficient irrigation water from a reliable source will sell almost immediately, Retief says that demand has dropped for agricultural properties with a strong hospitality element.
“Those with guesthouses, restaurants and function venues tend to remain on the market for longer periods, but this is largely due to the pandemic and likely to be a temporary situation.”
Cilliers believes that once the pandemic dust settles, all agricultural sectors in the Cape Winelands will once again be firmly on the global investor radar as there are very few comparative investment opportunities elsewhere in the world.
“The enticing synthesis of investment opportunity, value for money, unique lifestyle and scenic beauty will continue to be major draw-cards, and with the current devaluation of the Rand, substantial investment in a wine farm here at the moment equates to buying just a couple of rows of vines in a well-known estate in Bordeaux.
“And with our dams now being at their fullest in many years, and inter-provincial travel allowed, semigration is likely to pick up again and, as many upcountry buyers are looking to make lifestyle changes, we expect smallholding and lifestyle farm enquiries to soon translate into sales.”
