The total value of NSW farmland has risen above $200 billion for the first time after gains during the pandemic surpassed even those achieved by the state’s residential and industrial property markets.
Rural land values in the region around Albury in NSW’s south-west led the charge with a 43% jump in the 12 months to the end of June 2021. The wide, open spaces of the Hunter wine region, located within commuting distance from Sydney, Newcastle and Gosford, followed with an average 31% rise in values.
A combination of strong commodity prices plus high demand for quality grazing and agricultural land, hobby farms and lifestyle acreages has been fuelling the unprecedented rise in land values state-wide. The favourable economic conditions are attracting buyers across the spectrum, from small family-owned operations and sea-changers to large institutional buyers and consortiums of long-established Australian farmers. “Hybrid working models” which allow splitting time between home offices and regular workplaces is also contributing to the trend.
Looking for lifestyle
Landowners to reap some of the most substantial gains in property values last year included those with smaller holdings throughout the Hunter Valley’s Polkolbin district. The area’s property market has benefited from surging popularity of lifestyle estates during covid, with the area’s vineyards, wineries and holiday villas coveted by city residents seeking greener pastures and fresh air far from crowded urban environments. In the Blue Mountains, less than two hours west of the Sydney CBD, rural property prices saw a healthy 31 per cent rise, while land in the Hawkesbury district north of the Greater Sydney Region rose an average 20%.
Future looks bright
2021’s record-setting values crowned two years of modest yet consistent rural property gains: despite wide-spread drought the sector experienced 5% price rises throughout 2020 and 2019. Now analysts are forecasting another strong year ahead, albeit without such stark price rises as well as fewer listings.
Colliers International head of Agribusiness Rawdon Briggs said chief drivers of rural markets in coming months will be continuing low interest rates and favourable seasonal conditions. The current economic outlook for rural property was the strongest said he had seen for areas not overly exposed to trading changes with China. “I can see the market growing by 15% in value in 2022,” Mr Briggs said.
Buyers large and small
Well-established Australian farmers were behind much of the transactional activity that pushed up rural land values over the past six years said Col Medway, senior director of Land, Agribusiness, Water and Development (LAWD). Local landowners seeking greater efficiencies through scale were a major factor behind the spiralling values in the past 12-18 months, with one such deal involving the $370 million purchase of 22,386 hectares along the South Australian and Victorian borders. The purchase by was made by 27 groups of Aussie farmers who had joined forces to create holding sizes optimal for cropping infrastructure.
“If you look at the market fundamentals of what has happened to date, I don’t see any headwinds affecting these major factors,” Mr Medway said. “You would have to think the market will continue to strengthen.”
Current market conditions were such that any rural holding from a $1 million farm to a $1 billion agricultural portfolio would sell according to LAWD agent Danny Thomas. “Everyone in the world wants to buy,” Mr Thomas said.
Big deals for open spaces
Agricultural production is on track to hit $78 billion across 2021/22 on the back of one of an active 12 months’ buying and selling by some of the country’s largest landholders including Gina Rinehart, Andrew Forrest Canberra Airport owner Terry Snow and UK-based Australian billionaire Sir Michael Hintze. Hintze founded the group of agriculture companies known as MH Premium Farms (MHPF) in 2007. The company now oversees properties in eastern Australia totalling more than 70,000hectares and producing everything from wool to cereals and sugar via sustainable and environmentally responsible agricultural practices.
Among significant rural listings in NSW so far this year is the 11,260ha Yarrabee Park at Morundah which carries a $60 million price tag. Nationally, one of the largest sales is expected to be that of the Northern Territory’s Walhallow and Amungee Mungee stations near Daly Waters. Agents are seeking $320 million for the two stations which are co-owned by billionaire Brett Blundy and cover 1.32 million hectares.