Once again, those who live in the heart of Napa Valley are winners, this time in a report on vineyard values given at the annual Wine Industry Financial Symposium organized by David Freed and his UCC Group.

The event is a must for both those who invest in and lend to the wine business, and many members of the wine industry itself as they look into the future.

Vineyard appraiser Tony Correia of Correia-Xavier, who has been tracking property values since 1972 spoke about grape demand, cycles and their effects on land prices. A quick summary: When demand exceeds supply, people plant more grapes, and because of the nature of the perennial vines, the cycle has a 10- or 11-year period. “They always say it will be different this time,” he observed. “Everyone plants too many grapes since they think no one else is planting.”

Mother Nature can disturb the pattern. 1997 was a big crop year, and so were 2000 and 2005, and they tend to cause gluts. “2005 was a monstrous year for all varieties but pinot noir,” said Correia.

And when there’s a glut, grape prices drip and growers look for cheaper places to plant. Yet cheap grapes suffer far more than expensive ones. “Napa is relatively insulated,” he said.

Grape prices and land prices are closely related. The high prices paid for grapes in Napa Valley match the high prices for land.

According to Correia-Xavier, the typical price per acre for vineyards is:

• Monterey, $16,000-$35,000

• San Luis Obispo and Santa Barbara, $25,000-$50,000

• Sonoma, $40,000-$80,000

• Napa, $50,000-$275,000

Land in Napa Valley proper has recently sold between $45,000 (Rigi in Yountville) and $300,000 per acre (Cohn in Rutherford).

Not surprisingly, the highest prices are in the heart of the valley, from Oakville through St. Helena — and Howell Mountain.

By area, or AVA, the typical price per acre for vineyards locally is:

• Pope and Chiles Valley, $45,000-$75,000

• Carneros, $75,000-$125,000

• Napa Valley in general, $75,000-$200,000

• Heart of the valley (Oakville, Rutherford, St. Helena and Howell Mountain), $150,000-$300,000

An estate home site on the property could vastly inflate those figures, increasing the price for a plot as much as $3 million.

Few vineyards sales

Not many vineyards are being sold, according to Correia-Xavier. Over the past nine years, there have been 28 in the Napa Valley appellation, 15 in Oak Knoll, 14 in St. Helena, 13 in Carneros, 11 in Rutherford, nine in Pope Valley, four in Mt. Veeder, four in Yountville, three in Oakville and two in Howell Mountain.

Correia pointed out that this year is an ideal period for grape sales, with short crop, high quality and dropping stocks. “Winery-related real estate in North California continues to thrive,” said Correia.

On the other hand, he said, the credit crunch hitting the economy is taking its toll. “The vineyard estate market is suffering. The movement to ‘move up to Napa’ has died.”

Even so, people who can afford it continue to buy in the heart of Napa Valley. Correia said Napa real estate has appreciated at five times the Dow Jones Industrial Average between 1996 to 2006.

In spite of this, increasingly, land owners don’t sell. “People buy the top properties for generations, not immediate profits,” Correia said.

That’s fortunate, for it’s difficult to buy land or a winery and get a satisfactory return on the investment.

“The profits come not from operations but from property resale. That’s particularly true if you can split the property and sell as estates,” said Correia.

On the other hand, the inflation of prices makes it harder for growers to buy and hold on to vineyard land. Fortunately, growers can deed their land to conservation like the Land Trust of Napa County and in effect eliminate the premium for pricey home sites.

“They essentially give away the rights to a homesite they don’t want anyway. It makes a lot of sense in coastal California,” observed Correia.

In addition to vineyards, Correia also sees winery sales rising, but a lot of the value is in the brand.

“There hasn’t been that much change in value of the facilities and permit in the last six years.”

He added that, as one would expect, the cost per case is highest for small wineries — those making only a few thousand cases of expensive wine.