Argentina hot on wine investment

Forget buying an apartment or house in Argentina – the canny investor should be looking at vineyards, according to one expert in the South American property market.

Residential prices in Buenos Aires have been rising since 2003. Today, prices for apartments are at an all-time high and are not the necessarily the investment bargain they once were.

Look beyond it to Argentina's interior advises Lief Simon. 'Productive land is the buy today. I find vineyards a good choice, with good profit potential. You won't likely see your investment double in a year, but the values can be excellent,' he said.

Argentina boasts many wine regions, mostly in the provinces bordering the Andes. The high, dry climate is perfect for controlling the amount of water the plants receive. From the provinces of Salta to Rio Negro, there are vineyards. But the most productive province is Mendoza.

Mendoza is being compared to Napa Valley for both the volume and the quality of wine being produced. It's increasingly like Napa Valley in another way, as well. Mendoza is beginning to try to make a business of wine tourism, attracting growing numbers of wine enthusiasts from around the world. Vineyards are opening restaurants and boutique hotels and offering tours and tastings. They have even begun putting up signs pointing the way to their bodegas.

The downside is that this makes Mendoza one of the most expensive wine regions in Argentina. But expensive for Argentina can be cheap in a broader context. In California's Napa region, for example, land costs around $41,700 per acre and as much as $116,700 per acre planted with mature vines.

Land suitable for planting vines in and around Mendoza city can go for as little as $4,170 an acre if buying at least 240 acres. Get off of the beaten path in the surrounding province, just beyond the current main wine corridor, and you can find land good for vines for as little as $1,670 an acre. For land already planted with vines the cost is $8,340 per acre.

Planting vines costs between $3,340 and $5,000 per acre depending on the water system, the total area planted, and whether or not you put up netting to protect from hail and birds.

Liam Bailey, head of international research for property specialists David Stanley Redfern agrees that Argentina has a lot of potential as it is increasingly popular with tourists. 'Rental yields are already around the ten per cent mark and capital appreciation is conservatively estimated at 15 %,' he said.

There are no restrictions on foreigners buying property in Argentina but investors need to register for tax. Argentina has no capital gains, inheritance or gift tax and rental tax is 21% gross of annual income.

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