Three of Australia’s largest and longest-established national rural property marketing networks have made senior management appointments recently. For this week’s property review, we’ve taken the opportunity to engage with all three, seeking their views about competition in the cattle property market space, the opportunities that lie ahead, and potential growth.

 

Tom Russo – Elders

The beef cattle property market is a very desirable asset class, according to Elders’ new general manager for real estate operations, Tom Russo.

“It is being buoyed by a perfect storm of factors including record low interest rates, strong demand for slaughter and live export cattle, close proximity to all the key markets and high quality offerings,” he said.

Despite the conditions, Mr Russo doesn’t believe 2017 prices will rise much further.

“It has been a bull market for quite a while. Prices will settle, but they won’t collapse,” he said. “Solid prices will continue to reflect those ‘perfect storm’ conditions and also reflect that it is a seller’s market.

“For the timebeing, a lack of stock will keep those prices where they are.”

Mr Russo said properties that come on the market will transact, but the question is how many people will choose to sell their assets this year.

“Those in the industry are concerned that good quality listings are in short supply. There are only so many assets to go around, but there is interest from a good mix of buyers.

He identified these as:

• Good quality domestic cattlemen who know the country better than anyone else and who were looking to expand their operations;
• Local corporate buyers;
• Local investment funds; and
• Foreign buyers – from China, other parts of Asia and North America to name a few.

Even though the Chinese government is planning to crack down on foreign investment deals in a bid to stem capital outflows (see this week’s separate property item), Mr Russo said there was still a healthy interest being shown from China.

“While it is currently more difficult for them to transact, our investment manager in Shanghai is continuing to build relationships with Chinese investors, scrutinising their due diligence to ensure they are genuine bidders and have the financial and regulatory ability to transact,” he said.

Mr Russo said Elders was investing heavily in its marketing capability, training, technology and resources to ensure it is a market leader and an employer of choice in a bid to attract the best quality real estate agents.

“What makes Elders stand out from the rest is our network of people on the ground who know their patch, better than anyone else,” he said.

“We also have an excellent network of buyers and investors in the agricultural space. We will continue to grow that and look at ways to make it easier for investors to identify good properties and acquire them.”

Jason Michelmore – Landmark Harcourts

A month ago, Jason Michelmore was appointed as Landmark Harcourt’s new real estate manager for Queensland and Northern Territory.

He is returning to his former position with the company, but with added responsibility.

Landmark has a large footprint in Western Australia, Victoria and New South Wales, and Mr Michelmore will be responsible for the performance and further development of that brand in Queensland and the Northern Territory.

He said the corporate area was definitely a hot spot in the rural property market at present.

“You have to be in it to win it. Everyone is positive, everyone is optimistic. The season has been great in some areas and cattle prices are strong. They won’t last forever, but we might as well have a piece of that space while it’s going.”

Mr Michelmore agreed with Elders’ Tom Russo, that there are more buyers on their books than properties at present.

“The more beef cattle listings we can get the better. All agents are in the same boat – there is a lot of local and international activity.

The buyers are a mix of fund managers; overseas buyers; new investors; local families; people who aren’t in the industry but who want to get into it; and people who are in the industry who want to get bigger.”

Those seeking scale are looking for new opportunities or next opportunities to value-add to their current operations.”

Mr Michelmore said from an investor’s point of view, now was a good time to get into the Australian cattle property market.

“For a producer not looking to grow their business, then now is a good time to exit the industry”

“Australia is still viewed as a clean, green untapped food bowl – particularly in the south-east Asian region. From a vendor’s perspective, the market is robust, particularly in terms of property prices. For a producer not looking to grow their business, then now is a good time to exit the industry,” he said.

The challenge for buyers in 2017 will be access to properties, to match the strong inquiry. Mr Michelmore said competing in the current market environment will be the biggest test.

“If it is a good property, a highly productive property or a well-known property, there will be many potential buyers. On the flip-side, the challenge for sellers is knowing when to pick the market – has the market reached the top of the cycle, or will prices continue their upward trend in 2017.”

Mr Michelmore is confident Landmark Harcourts has the network and industry experience to secure more business.

“Most of our people have been in the industry for a very long time and fully understand what’s happening on the ground. We also have the reach. Larger corporates that come out of the commercial space lack that local expertise. That’s where we deliver.”

Stephen Nell – Ray White Rural

Stephen Nell became the national chief executive officer of Ray White’s rural  and livestock division last year, and is excited about all aspects of the newly-created job.

“There’s more and more interest in investment rural Australia – we are a food bowl and with the amount of enquiry we get from international players, you can’t help but be confident.”

Mr Nell said from an investor’s perspective, 2017 was a good time to buy.

“The season’s been kind, in some areas, the market’s been good and farmers are getting a reasonable to good return for their product. Australian property is attractive and purchasing is high on everybody’s list.”

However, he baulked when asked when is a good time to sell from a vendor’s perspective.

“It is difficult to answer. Buying and selling in the same market has always been the philosophy that works best for most people, however you can only act on the circumstances that you have in front of you at the time.”

Mr Nell believes the biggest challenge facing buyers and vendors this year is perception.

“There is a perception that listing numbers are low, but I don’t think that’s the case. There is reasonable demand, however properties coming to the market are being sold quickly, giving the perception there’s nothing for sale.”

“There is a perception that listing numbers are low, but I don’t think that’s the case. There is reasonable demand, however properties coming to the market are being sold quickly, giving the perception there’s nothing for sale.”

Mr Nell said that view fostered another perception.

“Some buyers are hesitant to purchase a property worried they are paying a premium and vendors become reluctant to sell fearing they will have nowhere to go. In actual fact that’s not the case. In most circumstances properties have traded quicker because interested parties have seen something they want to buy, have moved forward and purchased it.”

He said there was no evidence to suggest the property market has already seen the best of the foreign investment cycle on beef assets.

“There is still strong international investment interest, and while that might slow slightly, I am confident it will continue, at this stage.”

Mr Nell believes Ray White Rural is a modern alternative to the traditional agencies.

“We are investing heavily in technology. The new e-marketing will generate more and better enquiry and as a result, our customers – both vendors and purchasers – will be better informed. This should make the process of buying and selling rural properties easier,” he said.