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Weekly Property Review: Off-market listings attract ‘quiet money’

by Property editor Linda Rowley, 12 April 2017
Beckworth 3

A prominent property transaction that went down the off-market path last year was Beckworth Court in Victoria. The showcase 2450ha grazing property near Ballarat, with a carrying capacity of 30,000 DSE, was bought by Paraway Pastoral Co for above $15m.

 

THE 2017 cattle property market started optimistically enough when there was still a chance of widespread summer rain activity.

When the season didn’t eventuate in some northern areas, a property drought appeared to follow for some months – at least in the public realm via listings and promotion.

But behind the scenes, a bunch of property agents contacted this week claim more discrete business is still strong.

CBRE’s Brisbane-based Thomas Warriner said there had been few quality cattle property listings in Queensland recently, with the trend leaning towards off-market campaigns.

“We have six or seven off-market listings currently ranging from $10m to $70m, however if nothing eventuates after a month or two, some vendors might explore a marketing campaign,” Mr Warriner said.

He said they include a number of 10,000 to 15,000 head cattle breeder operations in Central and North Queensland.

“Those vendors have quality management in place and don’t want them moving on. As a result, we are trying to source potential buyers.”

Privacy versus cost

Elders Victoria agent Nick Myer agrees that many vendors are happy to sell quietly.

“It saves them the cost of a big public marketing campaign. Also owners of significant assets understand the type of business that is likely to show interest.”

Daniel McCulloch oversees the Gunnedah, Tamworth, Quirindi, Scone, Coolah, Coonabarabran, Moree, Narrabri and Inverell offices for Ruralco Property Davidson Cameron Real Estate.

He admits neighbours often talk over the fence over transactions, but he wouldn’t advise it.

“Anyone who is considering a deal could be short-changing themselves by not going to auction or EOI, because the market in this area is so hot. Who knows how much a cattle property could make in such a competitive market? With the good season and cattle prices continuing to strengthen, the property market is likely to follow suit.”

“People who are selling off-market should ask themselves how much money they are missing out on, by not going to auction or at least private listing.”

Peter McPherson from Queensland Rural’s Mareeba office in far North Queensland currently has three or four off-market cattle properties on his books, available for the right money.

“The vendors don’t want to promote the sales publicly. They want to see if there is interest out there and hopefully secure a deal. The properties range in price from $2.5 to $6m,” he said.

“Often, corporates or large, high profile properties are transacted off-market, and you don’t hear about the sale until the deal is done.”

An example is Far North Queensland’s 34,400ha Crystalbrook Station near Mt Garnet which sold recently to Syrian billionaire Ghassan Aboud’s GA Group for an undisclosed sum.

Mr McPherson said cost was not the reason landholders sell off-market, it was mostly the privacy factor.

“Some people would prefer to sell their properties ‘under the radar’. It can be difficult to sell a property you can’t promote, but that’s always been part of this business,” he said.

Matthew Kennedy from North Queensland’s Kennedy Rural agrees.

“Producers are often private and don’t want neighbours assuming they are in financial trouble and need to sell up. The downside of an off-market campaign is that it is time-consuming.  Last year, I spent six months trying to sell a couple of properties that amounted to nothing.”

Mr Kennedy has noticed an increasing trend in off-market sales, however.

“Fifty percent of our properties currently would be off-market campaigns. Those vendors are in no rush to sell. They are happy to wait until a suitable buyer comes along.”

Price potential

Mr Kennedy said it was interesting to note that some off-market transactions realised more than their ‘market’ value.

“Some international investors will not go to an auction. They are seeking an off- market deal because they need six months to source their finances from a superannuation company and will pay above market value to have that privilege.”

Mr McPherson has found the same – that some off-market properties have had no problem realising their price potential.

“A genuine buyer who is seeking a no-fuss, private sale is often happy to pay the price that’s being sought. However, that’s not always the case. Vendors looking to realise their property’s price potential should engage in a marketing campaign or sell at auction.”

Risk of an over-heated market?

With a greater number of properties transacting off-market, it potentially creates a greater focus and emphasis on what comes to the market. So, do people run the risk of paying too much?

Not according to Nick Myer from Elders Victoria.

“Most buyers are well educated on making decisions. If potential buyers can justify the expected realisation and make the numbers work, then a purchase should follow.”

Mr McCulloch said no matter what, real estate is always viewed as expensive.

“The day you buy there will be 20 people beside you saying you paid too much money for it. But the property market hasn’t gone backward, for any serious period of time, for the last 50 years. So yes, it might be a bit overheated, but what do you do? If you don’t buy, you might not get in.”

The key is match-making

Mr Myer said the aim in off-market deals is to match the right property with the right purchaser.

“Agents need to identify a location, individual properties, their capabilities, productivity, rainfall and soil types. Corporates aside, every buyer class has a mandate. If the agent thinks that a property fits their bill and the timing is right, then an approach will be made.”

Philip Frame from Frame Rural Agencies has been sourcing suitable properties for clients in the northern New South Wales district of Inverell.

“Recently, I had inquiry for grazing country with good water, infrastructure and a certain carrying capacity. I had nothing on our books, so I approached a couple of people who subsequently put their hands up and offered their properties for sale.”

He said another buyer wanted country to run 1000 cows.

“The only properties on my books were smaller mixed enterprises, so I have approached a Bingara grazier who is considering selling. Another wanted to return to Nundle and once again I sourced a property for him that wasn’t on the market. The client looked at the property on Friday and purchased it the following Friday.”

CBRE’s Tom Warriner said during general course of business, he advises buyers about off-market cattle properties.

“In this market, you need to know what clients are looking for, whether they be corporates or Australian-funds backed by local or offshore money. Overseas buyers are generally seeking investment-style joint ventures, companies or a group of properties they can invest in alongside someone.”

Mr Warriner predicts there will be more cattle property listings coming to market over the next three to four months, but overall 2017 is likely to be pretty ‘light-on’ for listings.

“There was a lot of buying activity last year. Many buyers have found their places, others are still waiting to see what the cattle property market does, but many believe we might have seen the top,” he said.

 

 



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