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Monday Nov 07, 2011

Historic Paarl estate latest wine farm to hit the market

One of the oldest wine estates in Paarl, which has been declared a national monument, is the latest wine farm to go on sale in the winelands district.

Seeff is marketing Rhebokskloof wine estate for R37 million. The estate spans 94 hectares and has four homes, including a 316m 2 farmhouse built in 1797.

Rhebokskloof is one of hundreds of farms and portions of farms for sale in the Stellenbosch and Paarl wine regions.

Interviews with Stellenbosch estate agents confirmed that the market is flooded with wine farms, but they say prices are too high, and buyers are reluctant.

Last Sunday, Weekend Argus broke the story about the depth of the crisis, as many wine farms struggle to survive.

Statistics from the South African wine and information systems (Sawis) revealed that South African wine exports had dropped by 25 percent, or 50 million litres this year, the lowest recorded figure since 2007.

Wine exports between August and September this year totalled 350 million litres, compared with 400 million litres exported during the same period last year, according to Charles Whitehead, from Sawis,

Danny Pringle, of estate agency Engel & Volker, said the agency had more than 100 farms on its books in Stellenbosch, Paarl and Franschhoek. Some of them were big and established farms. Prices ranged from R108 000/hectare to R8.74m/ha.

Dr George Cilliers, of Lew Geffen Sothebys, said the estate agency was marketing 85 wine farms in the same three towns.

"Investing in lifestyle has taken over from investing in agricultural land. People don't want to do the work that goes with a wine farm," he said.

Willie Badenhorst, of the estate agency RE/MAX Oaktree, said the agency was marketing 60 wine farms in Stellenbosch, 15 of these in the wine business only, while the other 50 were so-called "lifestyle farms", where wine was not the primary business. Prices ranged from R10m to R150m.

Stellenbosch branches of other estate agencies also indicated they were marketing dozens of wine farms.

Deon Carstens, director at Anna Basson Properties, said wine farm prices were considered too high when compared with the agricultural value of the farms. Smaller wine farms were struggling to fetch R1m/ha, and the average selling price was more in the region of R400 000/ha.

"Farms are not easy to sell. Farms remain on the books for a long time," he said, adding, however, that this could change "once big investors from overseas start buying again."

Badenhorst said the economic collapse worldwide, the strong rand, political insecurity, steep production costs, and consumers who drank less wine, contributed to the crisis in the wine industry.

He acknowledged that there were many more farms on the market than in the past, and they were taking longer to sell. "Foreign buyers are a lot less interested nowadays. Some are affected by the strong rand and are waiting for the rand to become weaker, others are concerned about the political situation. The whole industry is affected, but the primary producers, the real farmers, are having the hardest time. They're the ones who don't have their own cellar, but who deliver under contract to a cellar or a big company," he said.

Badenhorst said conditions were not easy for the bigger brands either. This was confirmed during interviews conducted last month with Simonsig and Beyerskloof.

Francois Malan, managing director of Simonsig, and Beyers Truter from Beyerskloof, said they were doing relatively well compared with primary grape producers who did not add value through bottling and marketing their own wines.

Chris Baker, from Pam Golding Properties, said there was a perception that "everyone is on the market, but it's not true". He lashed out at an estate agency that had placed a wine farm on the market for the inflated price of R55m, "while a similar wine farm was on the market down the road for R28m". "Who's going to buy the R55m farm?" he asked.

Weekend Argus (Saturday Edition)

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