Bordeaux: A trip to the land of fine wine

Bordeaux wines are the most extensively tracked wines in the world because of their importance to the market. The wines are rated three times before they ever reach the consumers, twice before the wines are bottled.

The name Bordeaux is synonymous with wine investments. This is attributable with the rich history and strategic location of the region. Red Bordeaux wine has an established resale past and is primarily the investment medium. Red Bordeaux remains the leading investment grade for wine auction prices. Also, the value of a Bordeaux wine is more readily identifiable, the 150-year old 1855 classification providing a framework for evaluating wine most widely held and traded.

Through centuries, the top Bordeaux wines have proven an exceptional ability to live long lives. IT is the foundation of their attractiveness among consumers and the foothold of their success among investors. A 50-year-old Bordeaux are as young and vibrant today as the day they were released. Bordeaux’s amazing ability to age enables investors to trade these wines repeatedly, from collector to investor, to finally an end consumer who is willing to pay up for a distinct rarity of the best Bordeaux.

The longevity and predictability of Bordeaux give collectors and investors the conviction that young wines will age gracefully and be worth more in the future, and gives them the confidence to buy and hold other vintages, knowing that they will improve in flavour and appreciate in price. History has shown that investment-grade Bordeaux dependably trends higher with the passage of time. Ultimately, no other region can be proud of so many wines that possess both the longevity of Bordeaux and the huge, established market for back-vintage wines.

As a result, as of 2008, the 118 Bordeaux chateaux account for 90% of the entire dollar volume in the investment-grade wine market, which includes the finest wines from every other region in the world. Amazingly, 25 of Bordeaux best chateaux account for approximately 80% of the dollar volume in the industry.

In fact, the new index Liv-ex Claret Chip Index, that is comprised of only the best, the Bordeaux Left Bank First Growth, has outperformed not only the Liv-ex 500 and Liv-ex 100 indices, but also the S&P 500 and FTSE 500 indices. This is evident in the graph showing the relative prices of the mentioned indices below.

We at Assetton primarily trade the region’s First-Growth wines that have the best winegrowing potential including Haut Brion, Lafite Rothschild, Latour, Margaux and Mouton Rothschild. These are the most sublime, sought-after luxury goods in the world, with the most solid, bankable track record.

Source: David Sokolin and Alexandra Bruce’s Investing in Liquid Assets: Uncorking Profits in Today’s Global Wine Market, Liv-ex, Bloomberg

LAND INVESTMENT: Canada

For hundreds of years, vast fortunes have been made in land. It can often be purchased extremely cheaply, and with little or no effort at all it can bring a return that is multiple times its original investment cost. There are more benefits -

• Buying land is usually a good deal compared to buying developed real estate.
• Purchasing land offers flexibility for the buyer. Depending on area zoning, land can be used for multiple purposes and have higher potential value.
• When you invest in land versus rental properties, there is no need for one to devote time, money, and effort to the maintenance of property or attracting and keeping a steady stream of reliable tenants.
• Returns on real estate investments in land can be substantial if you do your homework and invest where the demand is high or will be high in the near future. For instance, appreciation is almost guaranteed when land is purchased on the outskirts of a city in the path of development and held until the city develops outwards.
• The market for second homes and vacation homes is booming, and buying a lot or land is the first step to building a second home for investment, pleasure, or retirement. When new developments open, there are often good deals for early buyers who invest in lots before construction begins.

In Asia, land investment has been increasingly popular. Because land is fundamentally considered indestructible, there’s no depreciation allowed for tax purposes. Investors can potentially achieve annual net returns of as high as 20 per cent on their investments when the raw land obtains development approvals and they exit their investments in five years or less.

Land investment is especially attractive to those who have a medium to long-time horizon and with already sufficient savings to satisfy their liquidity needs. A good diversifying asset to complement the traditional asset classes of equities, fixed income, cash or cash equivalents, one should form at most a small component of an investor’s portfolio, say, 5 to 10 per cent on land.

The most promising are those with good location. Investors should apply similar standards of reviewing real estate investments to a land banking investment. Investing in raw land brings its best return when the land lies along a path or near an area of expanding economic growth and prosperity. Increases in land value are always dependent upon the land’s future use, economic growth, and demographics, which all boil down simply to the fundamental laws of supply and demand.

Consumers have to be mindful that those who had invested in land banking projects had benefited from the bull run in various asset classes over the five years to 2007. Hence, some projects marketed could have delivered high returns. Such projects rode on the appreciation of the Canadian dollar and the real estate sector. For instance, the Canadian dollar has appreciated about 50 per cent against the US dollar since 2003.

Another advantage of land banking is that it is a medium- to long-term investment, so consumers may be able to avoid the constant worrying they experience when they invest in financial markets.

Assetton provides the opportunity for you to invest in the prime land in Alberta, Canada. Alberta has shown tremendous popularity with investors, business and job-seekers. Assetton and its team researches, evaluates and purchases developable land that is in the direct path of urban growth. We ensure all necessary steps are taken to protect and yield the highest rate of return for our investors. Our exceptional price point and opportunity have made investing in developable land easy and exciting for every investor.

Source:
Smart Investor, Straits Times, Financial Web