China’s wealthy are seeking luxury acquisitions abroad, particularly vineyards

Amid all the interest rate commentary China has gone off the agenda a bit when comes to the likely impact on our economic future.

It was most noteworthy that Chinese buyers dominated the list of property transactions approved by the Foreign Investment Review Board, with some 5,000 approvals, mostly residential, amid the 9,770 approvals given to property acquisitions during 2010-11 year, according to the Foreign Investment Review Board (FIRB) annual report.

Just last week a Chinese mining tycoon and Australian citizen, William Han, chairman of China-based White Horse Australia Holdings Pty Ltd, beat Clive Palmer to acquire Lindeman Island for around $12 million.

Cici Dong, head of the Asia-Pacific desk at Savills, says during the recent three-day Beijing Luxury Properties Showcase her agency concluded several sales with Chinese investors of vineyards in the Bordeaux region.

She says while there has been growing interest in the luxury asset, the real vineyard boom is still to come.

Apparently around 20 French chateaux have been bought by Chinese businessmen and even a government-owned company, in the last five years, Dong told the China Daily last month

She explained that for Chinese buyers, owning a French vineyard is a status symbol and sign of "good taste". And Bordeaux is still considered to be the best wine location.

That hasn’t stopped considerable Chinese investment in Australian vineyards, especially the NSW Hunter Valley, of course.

The China Daily notes Chinese investors are believed to have bought six Hunter Valley wineries last year, with several more in the pipeline.

No wonder Andrew Margan, president of the Hunter Valley Vineyard Association, told ABC news recently that the association was happy for fresh investment from overseas, as the wine industry in Australia was "at the bottom of the cycle”.

As we watch any signs of Chinese buyers pulling back, Westpac reported today that the luxury behemoth LVMH is reporting its mainland China sales growing at a slower rate than its sales elsewhere across the world.

But it’s not suggested that China’s uber-wealthy have suddenly lost their taste for conspicuous consumption, as it instead points to the price gap between luxury goods purchased on the mainland and elsewhere is considerable due to a VAT (17%) and a luxury tax (30%).

So China’s elites are simply shopping abroad and swelling luxury sales in that way.

Elsewhere Westpac did note the industrial bellwether Caterpillar has indicated that Chinese demand for its construction equipment has been soft of late, making it a further casualty of the Chinese government-sought slowdown.