At 671,000ha Balladonia Aggregation, 190km east of Norseman in WA’s Goldfields-Esperance region, is one of the only large pastoral stations in the state currently being offered to the market.

In this week’s review, we take a look at two property regions of interest – the southeastern corner of Australia and WA’s pastoral zone.

THE exceptional money on offer for property in the south-eastern corner of Australia over the past few years has been replaced by more patchy performance, driven by tighter credit, reduced confidence and softening commodity prices.

The comment comes from Herron Todd White valuer Angus Shaw who said recent data pointed to a period of change with static activity depending on commodity type, location and buyer profile.

Angus Shaw

“A number of factors are at work including tightening credit conditions following the Banking Royal Commission, reduced business confidence, softening commodity prices, sky-rocketing inputs such as feedgrain (at over $400 per tonne), irrigation water (at over $500 per megalitre) and drought conditions,” Mr Shaw said.

As a result, supply was tight for good quality grazing assets in the region.

“Demand remains strong, however many who were looking to purchase have already done so in the last two years. Corporates are still on the hunt, however there is a lack of supply of good scale quality assets.”

Mr Shaw said most of the interest centred on rainfall, or lack of it.

“Buyers from drought-stricken areas of New South Wales are seeking to purchase an additional property in regions like western Victoria or south-east South Australia that have a more secure and higher rainfall,” he said.

“Corporates are seeking country above $10 million. While it’s predominately local money, there is also some foreign interest,” Mr Shaw said.

Nick Myer

Nick Myer, who oversees Victoria and the Riverina for Elders Rural said while there was still plenty of optimism, many potential vendors were waiting for the season to break.

“Demand is widespread. While western Victoria is always popular, there has been renewed interest in the Goulburn Valley and parts of the Riverina due to water security,” Mr Myer said.

He said interest is coming from a combination of buyers.

“There are local and interstate private buyers as well as institutional investors – most local with some foreign backing seeking properties above $10 million. They are acquiring assets in locations where they already have existing establishments.”

Mr Myer said while all commodities were on the table, dairy has become an asset class of interest.

HTW’s Angus Shaw said an increasing number of secondary type grazing assets were now hitting the market.

“With the majority of quality rural assets removed from the market and the remainder of owners hanging-on for the next cycle, potential buyers are expressing greater interest in second-class holdings.”

He said these secondary assets may have a lot of development potential, marginal country, limited security of water or access or less than ideal improvements or make up, so buyers should be cautious.

“A lack of supply, good commodity prices and a desire to expand often means producers are unwilling to hold out for a prime asset, and instead purchase anything rather than nothing.”

Mr Shaw said it was essential that producers undertake sufficient due diligence.

“It is easy to develop pastures and improve infrastructure such as fences, but buyers, especially those from interstate or overseas, should be well-informed when it comes to soil types, rainfall belts and water security.”

Mr Shaw said the few sales that were currently occurring continue to maintain strong value levels.

“Strong money is still being paid, particularly for grazing and cropping assets in Victoria’s central west and South Australia’s south east. I would expect demand and values to remain strong for the remainder of the year, depending on the season.”

Few pastoral stations for sale in WA’s north-west

In Western Australia, Herron Todd White reports there is strong demand for country from both local and corporate investors, particularly for cropping properties after a good harvest and a string of above-average growing seasons.

David Abel

HTW’s David Abel is confident values will remain strong as demand continues to surpass supply.

“Reduced debt levels are allowing locals to purchase additional land for expansion, develop their land and improve farm infrastructure,” he said.

As a result, a number of large rural landholdings are currently on the market.

“Sellers are seeking to capitalise on recent high returns and favourable growing conditions and there has been some interest in southern grazing properties for finishing and feed during dry spells in the north,” Mr Abel said.

Pastoral sales specialist, Greg Smith from Elders notes there has been increased interest in the 223,101ha Narndee Station, 430km north east of Perth, in the state’s Mid-West region.

“Set up for rangeland goats, the operation would be ideal to convert to cattle. Historically one of the best goat properties in the area, Narndee is rated to run around 15,000 DSE, 2142 cattle units or close to 20,000 rangeland goats,” he said.

The 223,000ha Narndee Station, 430km north east of Perth, is rated to run around 15,000 DSE, 2142 cattle units or close to 20,000 rangeland goats

“Producers believe it wouldn’t take much to stock the station with heifers, currently selling at around $250 a head. They expect prices will take off sometime in the future, as their eastern states counterparts build up their breeder herds.”

Mr Smith said while there is still reasonably good domestic demand for pastoral country, there was limited availability.

“It is critically dry across the north of Western Australia – the Pilbara, the Kimberley and the northern Gascoyne – and there are no properties listed for sale in those regions at present,” he said.

And Mr Smith is not expecting many properties to hit the market in the foreseeable future.

“Good quality cattle stations are in a holding pattern at the moment, with potential vendors staying away until the season breaks. A large number of properties have already turned over – those who had been patiently waiting to exit the industry have taken advantage of the strong property prices and have sold up.”

Mr Smith believes the market has peaked and property prices are now pulling back.

“The value of Western Australian cattle stations is based on an aggregation of land, livestock, plant and equipment. So, when heifer prices start to slip and buyers become more particular about quality, the impact translates to lower prices.”

He is hoping a rain-bearing depression will halt the potential sell off of younger and older females, along with a slide in property values.

In the meantime, Balladonia Aggregation, 192km east of Norseman in WA’s Goldfields-Esperance region, is one of the only large pastoral stations currently being offered to the market.

Comprising four stations (Balladonia, Nanambinia, Woorlba and Noondoonia) and spanning 671,277ha, the aggregation was purchased 18 months ago for $5 million, including 2500 head of cattle.

The Chinese owners have now put a $8.5 million price tag on Balladonia, including 5500 head of cattle – more than double what was included at the last sale – and 180km of new fencing. An extensive list of plant includes an R22 helicopter, D9 equivalent dozer, 50-tonne excavator and a tri-drive prime mover with 100 tonne low loader.

Balladonia Aggregation, 190km east of Norseman in WA’s Goldfields-Esperance region, is one of the only large pastoral stations in WA currently being offered to the market.