It’s not just real estate prices in cities that are booming – after years of drought, the rains have arrived and the country’s agricultural sector is experiencing a resurgence.
According to data compiled by The Australien.
Even the skepticism of Chinese investors, long a cornerstone of local commercial real estate investment, does not seem to have tempered the mood.
Australia’s median farmland price jumped 12.9% in 2020, according to a new Rural Bank study, reaching $ 5,907 per hectare. And the number of deals rose 14.5% from 2019, when a severe drought pushed sales to new lows.
But despite the surge in prices – and the lack of Chinese investors fearing deteriorating links between Beijing and Canberra – rural agents say there is no shortage of buyers looking for assets.
Richard Smart, a 45-year horticulturist and irrigator in the Murray Darling Basin, has decided to sell his Roma farms near Renmark, South Australia.
What started in 1976 as a small citrus plot near the Victorian border, Mr. Smart has grown to 2,079 ha of almond and grape trees. Although the sale was a difficult decision, he said he was encouraged by the high value of the land and hoped to sell for $ 60 million.
“It’s time to move on for us, and yet the business has been amazing,” he said. “It’s a pretty tough decision to leave because it’s my life’s work, but I’ve had some fabulous experiences.”
Mr Smart said he had attracted interest from large companies in the area which he said was due to the sheer size of the property.
“I don’t expect another farmer to buy it, but I think they’re going to split it all up. Large companies are the most aggressive, ”he said.
Geoff Warriner, head of agribusiness at commercial real estate agent JLL, said it was the strongest market he’s ever seen.
“Low interest rates, the majority of people taking a break from the drought, and high commodity prices are behind the boom,” he said.
“These three things don’t usually go together.
“It’s a once-in-a-lifetime event that allows producers to finally be able to move, whether it’s buying or selling,” said Warriner. “The market is hot across the spectrum, from large-scale cultivation, irrigation and horticultural agriculture, to grazing and intensive production systems.”
Mark Barber, Elders’ agri-food investment manager, said the market was mainly supplied by domestic buyers, with private farming families at ground level.
“The amount of money placed in farm management deposits is a good indicator of the spending capacity of the sector,” he said.
“It is only individuals who can put money into these accounts, and the substantial money in them indicates that there are very strong balance sheets and that they are looking to deploy excess capital in their operations. .
“They know their businesses, they work well, and they know that scale is one of the main factors contributing to productivity growth.”
Mr Barber’s opinion is supported by a recent study by Rabobank, which found that the proportion of farmers wishing to buy land was at the highest level in four years.
But corporate investment is also increasing with a number of high-priced wallets coming up for sale.
In the most recent development, investment firm Packhorse Pastoral, Sydney fund manager Tim Samway is trying to raise $ 1.5 billion over the next five years to create a cattle empire. Then there’s the bidding war between private equity firm Roc Partners, which raises funds locally and in Asia, and Macquarie for Vitalharvest’s orchards. Auctions on the portfolio, currently leased to the Costa group, reached $ 350 million.
Growing demand for Australian red meat, along with rain in northern Australia, has also made grazing properties an attractive investment for corporate funds, with returns on grazing assets reaching 30% year-round. last.
Rawdon Briggs, head of agribusiness at Colliers International, said the appetite for larger portfolios was driven by buyers who saw investments in farmland as a safer alternative to other assets under conditions of uncertain market.
“They are seen as safer investments (compared to) investing in something like retail or a large mall,” he said.
“Agriculture and in particular agriculture related to food in these times is quite sought after.
“It’s a good place to be right now if you’re a salesperson. Especially with voluntary lending practices, and none of that will change until the bank lenders are significantly disrupted and I don’t see that happening in the short term. “
The more than $ 2 billion of farms in the market include Macquarie’s 105,000 ha portfolio, known as Lawson Grains, which hit the market in March and is expected to grow to over $ 600 million.
The asset is nearing the end of its 10-year life as a fund, and investors are poised to take advantage of good market conditions.
The sale is handled by Land Agribusiness Water Development, which also sells Bellevue, an aggregation owned by businessman Nick Burton Taylor.
Mr Burton Taylor – the current Chancellor of Southern Cross University and former President of the Australian Agricultural Company – sells his $ 40 million cattle farming business in far north Queensland as part of ” a family succession plan.
LAWD’s books also contain 2,040 ha of pasture in the dairy country of Gippsland, which is offered for sale by Duxton Asset Management and is expected to bring in $ 70 million.
Mine tycoon Gina Rinehart has listed several cattle farms owned by her private company. She expects $ 300 million on sales.
Northern Star Pastoral’s Colin Ross, who is retiring from his Limbunya and Maryfield station, is also expected to sell for more than $ 150 million.
PwC is leading the sale of Auscott for $ 500 million, one of the largest cotton producers in Namoi, Macquarie and Murrumbidgee. The current owner, JG Boswell Company, is the largest producer of cotton in the United States.