Napa County vineyard land values held steady or improved in 2012, said a new ag land value report from the American Society of Farm Managers and Rural Appraisers.
An acre of Napa Valley vineyard can sell from $50,000 to $300,000, depending on location and the all-important concept of terroir. To compare, that same acre of grapes planted on the Sonoma County side of the Mayacamas Mountains would typically fetch less than half of that.
Premium cabernet sauvignon, “the hallmark of the Napa wine industry,” drives prices in the most prime locations including the valley floor areas of St. Helena, Rutherford and Oakville, as well as the surrounding zones such as Pritchard Hill, Howell Mountain, Stags Leap and Spring Mountain, said the ag report.
Those land values remained at 2011 levels, with values topping out at $300,000 an acre, the same as in 2012.
“They are the highest ag values in California and the U.S.,” said Hal Forcey, senior appraiser at American AgAppraisal and author of the Napa County report. “Napa is the best of the best” — the Aspen or Neiman Marcus of the wine world, he said.
Other Napa County lands such as the Carneros, Oak Knoll and Napa areas saw slight value increases in 2012, with prices as high as $200,000 an acre. Values in outlying areas including Pope Valley, Chiles Valley and American Canyon rose slightly to range from $50,000 to $100,000 an acre.
Unlike in 2011, which saw the emergence of Chinese buyers, a growing number of 2012 buyers were locals. “This is a very key consideration,” because markets dominated by local buyers are typically markets in recovery, said the report.
2012 was a “banner year” in terms of the number of properties sold. The so-called “lifestyle buyer” returned to the market, the report said.
Forcey described three such purchases, all on Oakville Road. Surrounded by Rudd Winery, PlumpJack, Harlan Estate and Screaming Eagle wineries, one parcel of 3 acres sold for around $5 million. One horse ranch sold for $8 million.
Those California-based buyers were “knowledgeable and looking at this market for a number of years,” he said. “They see the value and they say, ‘It’s going to cost me a bit but I’m going to do it.’”
He noted, “These things aren’t sitting on the market for very long.”
According to Forcey, winery optimism remains strong, making vineyard land an attractive investment opportunity. While it is becoming easier to get financing, the cash buyer has emerged as the biggest competition. On top of that, local buyers know that there is only so much plantable land left.
“As a result, they are actively buying before prices really start to escalate. People are frantic to find those properties,” said Forcey’s report.
“In a normal year there are 15 to 20 commercial vineyard sales, and for 2012 we confirmed over 40. The sheer number of transactions has easily doubled,” Forcey said.
Silverado Premium Properties, Heitz Cellars, Paul Hobbs Winery, Vintage Wine Estates and Treasury Wine Estates all bought vineyards or land in 2012.
Forcey said that his appraisal business would typically note five to 10 winery transitions in a year. “We are running double plus that in 2012.”
The appraiser noted that many of those sales were confidential, but they included Steltzner Vineyards and Sawyer Cellars.
Grape supply continues to be a major concern in 2013, with “most wineries concerned there are not enough grapes to keep up with growing demand,” the report said. Market demand and values should remain strong with grape prices, land and vineyard values trending higher, according to the report.
“2013 is definitely on pace to blow 2012 out of the water in both numbers and values,” Forcey said.