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Fine wine galore! Hong Kong's buried treasure

Underground vaults conceal a priceless liquid hoard. Clifford Coonan reports

In December 1941, a munitions bunker near a former British Army base became the last place to fall to the Japanese during the Second World War invasion of Hong Kong. The shells have long since been cleared; now the vast underground vaults are home to an equally precious stock.

Here, cached 60ft below ground at Deep Water Bay Drive, lie two bottles of 1869 Château Lafite worth £142,000 each. Among the most expensive wine in the world, even their owners are not told the bottles' exact location.

The former Crown colony has overtaken London and New York as the world's biggest auction market for top labels such as Château Lafite Rothschild and Domaine Romanée-Conti, after the Hong Kong government slashed the duty on wine from 40 per cent to zero in February 2008. Hong Kong now sells more fine and rare wines than the other two important wine-selling cities put together.

"On a pure wine market retail basis, just for the rare and fine wine market, we in Hong Kong are probably the centre of the world," said Greg De'Eb, general manager of Crown Wine Cellars, which runs one of the storage centres.

As in so much of the luxury market in Hong Kong, the expansion is being driven by money from across the border in mainland China, where decades of strong economic growth has created a new breed of wine investor. Although some collectors still tell horrified tales of mainland Chinese collectors dumping £46,000 bottles of Chateau d'Yquem into punch at parties, there are just as many stories about canny Chinese investors becoming better at understanding the vintage wine market.

Compare the situation in Hong Kong to China, where imported wine is taxed at 45 per cent. In Britain, tax on wine works out at 41.7 per cent, once excise duty and VAT are factored in. This tax-free status means that wine storage has taken off, and around Hong Kong, at least 15 wine repositories have sprung up.

Mr De'Eb,m a former diplomat, opened the company's first wine cellar in Hong Kong in 2003 with his colleague Jim Thompson and it now has three sites in Hong Kong. The group ships at least one container a month from the UK alone, with an average of 700 cases of investment-grade wines, plus others from Europe and the US. The values range from a few hundred dollars to £36,500 a bottle.

"It's not just the tax. We did a huge amount of market research and all the research indicated that 15 per cent of the rare and fine wines in the world were owned by Hong Kong collectors," said Mr De'Eb.

"The foundations were there. We have a depth of knowledge and a resource of collectors and knowledgeable people here, it was a success waiting to happen. When we started lobbying in the 1990s, never did we imagine this could happen. Since the zero taxation policy, everything has exploded."

In addition to Crown Wine, other cellars include Modern Wine Cellar, a 41,000sq ft storage space recently opened in the New Territories, which uses a burglar alarm system, CCTV, fingerprint access control and other security devices to keep the wines safe. Each wine is bar-coded to protect ownership – people in the business are still talking about an incident in London when a case of Château Lafite Rothschild was discovered to have unlabelledbottles. The Hong Kong Wine Vault, in Aberdeen, a 30,000sq ft facility, was set up by wine-lovers in the town and has tasting rooms with fully fitted kitchens. Members can have dinner parties using outside caterers as well as buying wine. It even advertises that it is located near a bus stop – the idea of a wine collector taking the bus seems to go against the traditional image of the wine buyer, but all sorts of people are getting involved in wine in Hong Kong.

One of the companies which uses Crown to store its wine is the auction house Sotheby's. Robert Sleigh, who runs Sotheby's Asia wine business, believes that Hong Kong's position at the heart of expanding Asian economies has cemented its ranking as a major wine auction centre.

"We deal with an elite group, whether it be paintings or ceramics. Although we sell expensive wine here, it's still the cheapest thing you can buy at Sotheby's," he said.

"You can still buy a case of wine here for HK$10,000 (£780). You get a lot of people in finance, lawyers, doctors, they are our typical demographic. There are people who have acquired a lot of wine in a short period of time. We sell a very narrow range of wines here – New York or London are extremely diverse and esoteric, but here it's very focused."

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