Drought won’t deter NSW Agribusiness land values

Low interest rates, strong livestock and commodity prices drive land values in NSW

In spite of the tough drought conditions affecting the country, agricultural land values across NSW strengthened in 2018 and will continue to do so this year, according to Colliers International.

Despite below average rainfall and extremely dry seasonal conditions, the land value of several properties exchanged last year exceeded price expectations across several regions of the state. 

International and institutional investor enquiry was also very prevalent in the marketplace, particularly for large scale assets.

Colliers International found that rural land values in both high rainfall grazing areas and reliable cropping regions of New South Wales strengthened in 2018 and based on current demand and confidence, will continue to grow in 2019.

“We have identified a significant upward trend in land values across several areas of New South Wales with some regions up 30% to 50% on average, in comparison to where values were in 2015-16,” said John Harrison, Associate Director of Agribusiness Valuations, at Colliers International in Sydney.

“It is clear that low interest rates, a lack of listings and strong livestock & wool commodity prices are primarily driving the surge in land values, igniting strong demand from existing farming entities looking to expand or diversify their portfolios.” 

Mike Clifton, Director of Transaction Service for Colliers International Agribusiness, said “Colliers International conducted several significant sales in 2018 which demonstrate strong land values.”

“These included 16,554 acres of premium quality mixed farming at New Merrigal in Collie for $16.3 million; Diverse cattle breeding in Glendon Park, Armidale (7996 acres) for $14 million; and the sale of Truro Cootamundra - 2360 acres of premium mixed farming – for $8.32 million.”

“Evidently, the uplift in land values came on the back of strong returns from livestock, with sheep and prime lamb producers currently enjoying fantastic returns along with strong wool prices.”

Recent sales in the western areas of NSW have revealed dry sheep equivalent (DSE) rates ranging between $400 and $600, whilst high rainfall grazing areas are seeing DSE values ranging from $600 to $800.

There has also been strong demand for large scale dryland and irrigated cropping assets, which have primarily attracted interest from institutional and corporate grade investors. 

“We would expect values to remain firm for these assets on the back of continued strong enquiry from both local and offshore investors,” Mr Harrison said.

Throughout 2018 and into 2019, the water market has become a key talking point, with water entitlements thinly traded in NSW and experiencing strong demand with the majority of recent trades comprising smaller parcels. Commodity prices for fodder, nuts, table grapes, citrus and almonds are currently positive compared to previous years. 

“As a result of the current high values for water, summer crop planting programs are generally well down on historical averages with the high cost of water making irrigators reassess their margins” said Mr Harrison.

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Mike Clifton

Director | Transaction Services | Agribusiness

Sydney North

Mike has been a licenced Real Estate, Stock & Station Agent and Auctioneer for over 40 years operating in both the Private and Corporate sectors and specialising in Livestock, Property and People.

Mike is highly skilled, enthusiastic and is passionate about the rural sector and takes great pride in building strong, long term relationships. With a strong focus on delivering positive outcomes for all stakeholders, Mike’s expertise includes Livestock, Cropping, Horticulture, Viticulture and Agribusiness generally covering New South Wales, Queensland and Victoria. 

Recent Sales:

  • Nebea South - Coonamble - 16,468 Acres - $ Confidential;
  • Tickalara - The Oaks - $ Confidential
  • Camyr Allyn -  Scone - $5,575,000
  • Glendon Park- Armidale - $14,100,000
  • New Merrigal - Collie -  $16,300,000
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John Harrison

Associate Director | Agribusiness Valuation & Advisory Services

Sydney North

Since joining Colliers in 2012, John has formed part of the Agribusiness Valuation and Advisory Services team, undertaking valuations on a wide range of rural properties. John has particular experience in the valuation of dryland and irrigated cropping, high rainfall and pastoral grazing, vineyard, forestry, irrigated horticulture (broad hectare potato & onion production and permanent tree crop), dairy and poultry assets.

Based out of New South Wales, John has undertaken valuation assignments on farms located throughout South Australia, Victoria, New South Wales, Western Australia, Tasmania and the Northern Territory.

Having grown up on the family property in South Australia's Lameroo district, John has first-hand knowledge and experience of rural property operations.

The valuations he has worked on have been for a number of purposes including Mortgage Security, Financial Reporting, Potential Acquisition/Disposal, Estate Planning/Settlement, Compulsory Acquisition and Insurance purposes.

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