AFTER seven years of increasing rural land prices, real estate and advisory firm LAWD Senior Director, Col Medway, encouraged value-seeking buyers and investors to consider dairy, Western Australia, carbon and Northern Territory cotton.

The highly experienced transaction specialist, highlighted there was little room in the top performing regions of the Western District of Victoria, through to the New South Wales’ Eastern Riverina, South West Slopes, and central west.

“Mixed farming regions are still the strongest,” Mr Medway said.

“They’re reliable regions for rainfall in most years, and I suppose, it’s the old story where capital flocks to quality – in any market those areas are obviously highly sought after.

“That is largely to do with the flexibility of enterprise, as well as strong commodity prices across cattle, sheep and grain.”

Mr Medway said buyers seeking a gap in the market should cast their gazes west.
“When you look at Western Australia there is a bit of a disconnect between land prices,” he said.

“You can compare WA properties to arable NSW land with similar rainfall, and they are being traded with a considerable discount.”

“I don’t fully understand why that is. Obviously, it’s probably a big leap for someone from the East Coast to then go and create a hub in WA. But they’re having great seasons over there as well, and I think that’s where there’s been a little bit of a gap in the market.”

According to Mr Medway, there is also an emerging opportunity in the dairy sector, as processors face a milk shortage.

“Despite the sector improving, dairy farmers have done it really tough through drought, which was coupled with low milk prices and high cost of inputs,” he said.

“That’s where a lot of people left the sector, and now the processors are crying out for milk and are paying higher values and so dairy farmers are experiencing a real rebound.”

Rapidly changing landscape

Mr Medway said family farms continue to drive the bulk of transactions in the country.

“There’s mum and dad at 50 and 60, and there’s the 20 somethings and 30 somethings behind them that have got a real appetite to grow, got time on their hands, they’ve got energy and they’re happy to step out and bite hard and chew quick and have a crack. So, they’re certainly the ones who are driving the market,” he said.

“That’s not to say corporates aren’t involved, and they certainly are. But the current pace of the market makes it hard at times for corporates to participate.

“The family farmer is able to eyeball a place, do some numbers, talk to their bank, and decide, ‘that one’s for me’. They are on the front foot and can certainly be nimbler than the institutional investors.”

Despite the strength of family farms, Mr Medway said corporates and institutions are still finding innovative ways to participate in the market, and capture value from emerging investment opportunities, such as carbon. He highlighted the recent joint-venture acquisition of Northern Territory properties, 147,300ha Maryfield and 521,883ha Limbunya, which included approximately 50,000 head of cattle.

“This is a splitting of an asset of how it will run. Wealthcheck will focus on land management and carbon, while AAM Investment Group have purchased the cattle,” Mr Medway said.

“I think that’s a really interesting sort of differentiation where people are sticking to their knitting, and different investors are looking at that asset and taking advantage of it in completely different ways.”

Mr Medway said, other opportunities in the Northern region, included the rapid expansion of cotton.

“There’s just the trail of dust of Land Cruiser, after Land Cruiser, of southern cotton growers heading to the Northern Australia looking for opportunities,” he said.

“There’s good land potential, water entitlements, but obviously there’s also a big play just looking at cotton on a dryland basis.

“It’s going to be exciting to see what happens in the future in Northern Australia.”

Rising interest rates equation

While rising interest rates had been identified as the major headwind for rural land buyers, Mr Medway said interest rates were still at historically low levels and demand continued to outstrip supply.

“In March this year that interest rates were at 0.1% and now they are 2.35% – if you look at history, they were always going to rise, at some stage,” he said.

“We’re just getting back to neutral levels.

“There certainly isn’t the flood of enquiries, we have seen over the previous two spring selling seasons, however, and there is still very, very good solid enquiry from highly qualified buyers who are finance approved, active in the market, and looking to expand.”

To hear more market insights from Col Medway, listen to his interview with Humans of Agriculture (HoA), here. HoA will be releasing quarterly updates from the leadership team at LAWD.