Investments: vineyards and forests, low-tax recreational investments

Ideal for diversifying your portfolio, investing in vineyards and woodlands will allow you to benefit from a nice exemption from inheritance tax.

If you have money and a taste for earthly things, why not buy forests or vineyards? Tangible, immutable assets, uncorrelated with financial markets, which, with the health and environmental crisis, make more and more sense for your investments. Business leaders who have sold their businesses and found themselves at the helm of handsome capital love this very much. The most ambitious can take over the production of a forest or a vineyard. Others will prefer to care for it from a distance and are content to buy rural land and rent it to a forester or winemaker they visit occasionally. But it is not given to everyone. Especially for wine lovers.

The cost of the investment will depend on the type of land being bought, 1 hectare in Champagne is negotiated between 1 and 1.5 million euros, while prices in Burgundy are skyrocketing, according to Benoît Léchenault, head of forestry and vineyards at Agrifranca, a subsidiary of BNP Paribas Private Bank. For wines that have a strong reputation and sell well for export, you won’t find anything under 5 million.” It is prestigious but not very profitable (0.2% gross per year for fine wines from Burgundy or 1.5% for Champagne) if we do not include the added value in resale that can save the business plan (+3% to +5 % per year in Champagne and up to more than 10% per year for fine wines from Burgundy).

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Also read: Investing in wine? Everything you need to know before you get started

Attractive taxation

The forest is more affordable, between 700 and 15,000 euros per hectare (the average area is just over 100 hectares). All with very low taxation, especially in the event of death, this property is exempt from inheritance tax up to 50% or 75%. Too expensive for the average person, who can still get shares in wine or forest land groups (GFF or GFV) with more affordable tickets, from 1,000 to 30,000 euros per share. The philosophy is exactly the same: diversify your assets by buying a strategic asset from an economic, environmental and social point of view.

It is less risky than direct investment because these groups, invested in several forests or vineyards, are better diversified. The annual yield is generally stable but low, with a chance to realize a rosier capital gain on resale. “Our GFI Patrimoine, the largest forestry fund in France, invested in 120 forests, offers a small return of 1% net per year, but as the price of forests increases, the capital gain from resale can increase the overall performance target, which, all inclusive (yield and value added), can reach 2.5% net per annum», says Gilles Grenouilleau, deputy director of France Valley.

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Also read: “Common heritage”: those individuals who invest in forests to use them wisely

Here again, there was a pleasant strengthening of the transfer, thanks to the exemption from inheritance tax in the amount of 75% of the share of forests held by the fund (most often 90% invested in forests, the rest is liquidity). Attention, you have to think of it as a very long-term investment and not need the money invested because like SCPI the fees are very high (around 10% at signup, 1% every year after that). Their amortization therefore takes some time. With this in mind, the purchase to transfer remains relevant.

High prices per hectare but available through funds

Bordeaux

  • Bordeaux red: 17,000 to 25,000 euros
  • Saint Emilion: 300,000 to 3.2 million euros
  • Pomerol: €1.9 to €6.2 million Saint-Estèphe €483,000 to €1 million
  • Pauillac: 2.9 to 3.6 million euros
  • Margaux and Saint-Julien: 1.2 to 1.9 million euros

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The Marne Valley

  • Champagne: 1.3 to 1.6 million euros

Burgundy

  • Grand Crus: 8.3 to 18 million euros
  • Premier crus: 2.2 to 4.3 million euros
  • village: 890,000 to 2 million euros

Rhone Valley

  • Hermitage: 1.3 to 1.5 million euros
  • Cote-Rôtie: 1.3 to 1.4 million euros
  • Chateauneuf Pope: 530,000 to 579,000 euros
  • Gigondas: 240,000 to 270,000 euros
  • Vacqueyras: 122,000 to 153,000 euros
  • village: 37,000 to 64,000 euros
  • Cotes du Rhone: 25,000 to 37,000 euros

Provence

  • Côtes-de-Provence: 56,000 to 151,000 euros
  • Bandol: 139,000 to 181,000 euros
  • Cassis: 116,000 to 155,000 euros

Average values ​​per hectare in 2022.

Source: Agrifrance BNP Paribas Wealth Management, 2023

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