2017 was one of the best years on record for Australia’s agriculture industry and 2018 is shaping up to be just as positive.
Colliers International’s Nick Cranna, Director of Rural & Agribusiness Valuations, said 2017 had been the strongest year he had witnessed in the local agriculture sector.
“We saw a phenomenal amount of investment into agriculture last year, from the neighbour-to-neighbour market – which is traditionally the backbone of rural property markets – through to high net worth individuals in the city as well as insitutions and established large corporate agribusinesses,” Mr Cranna said. “The whole suite of buyers were incredibly active in 2017.
He said the majority of commodities performed strongly in 2017 and were forecast to continue to do so in the year ahead.
“The dollar was highly favourable to the agriculture sector, particularly given around 60% of Australia’s agriculture is exported, and we saw all-time record low interest rates,” Mr Cranna said. “All the levers are pointing in the right direction, economically speaking, and we don’t see 2018 being any different.
“A lot of regions experienced 20-30% property growth in last 18 months, which is outstanding in any market."
Mr Cranna said increased levels of development within the sector was a strong sign of ongoing confidence.
“There’s so much development going on in agriculture – people are spending money on their farms, and there is also a lot of greenfields development,” he said. “A lot of the nurseries in Australia have waiting period of in excess of two years just to get trees.
“There is so much interest in agriculture, which is driving values for greenfield development sites and also established orchards which have proven cashflow at the ready."
The horticulture, grain, grazing and wine sectors would all be in hot demand in the year ahead.
“Horticulture will continue to be very popular into 2018, particularly in Victoria along the Murray, in Sunraysia, the Murray Valley, Goulburn Valley and Gippsland.
“Other commodities which should continue to do well are the grains industry, and the western districts and also the Wimmera in particular. There is a lot of appetite for investment in those regions.
“There is significant capital which has a mandate to invest in the grains industry in Australia, so that will continue to see strong interest in the year ahead which will also drive land growth in those regions as well.
“Underscoring all that, there’s certainly a flight to quality or a preference for high rainfall grazing enterprises."
Mr Cranna said the wine industry was going from strength to strength, largely driven by growth in Australia’s key export destinations, such as China, and particularly for high value wine.
“We’ve seen demand for fruit really increase over the last vintage and leading into this vintage we will see grape prices rise again,” he said. “In 2017, grape prices jumped significantly and we think we’ll see further increases in 2018. This obviously translates to interest in property in the wine industry.
“Because of Melbourne’s population growth and the accessibility of popular wine regions such as the Mornington Peninsula and Yarra Valley, Victoria will be a prime target for these investors.
“A lot of overseas investors are focusing heavily on these markets, because they are recognised regions offshore and provide sought after access to Australia’s fastest growing population.
“We will certainly see strong demand for wine industry properties in the Mornington and Yarra Valley regions in 2018.”