THE first-ever investment in Northern Australian extensive grazing assets by Chinese interests has thrown an important new dynamic into the region’s property market.
Beef Central has learned this morning that Elizabeth Downs, a 205,000ha grazing property west of Tipperary in the Northern Territory’s Top End, has been sold to Chinese private sector interests, Yiang Xiang Pty Ltd.
There has been mounting speculation about possible Chinese investment in northern Australia’s grazing industry for some time.
While Chinese interests, through Shanghai Zhongfu Foods have bought into the Ord River irrigation scheme across the border in the northeast corner of WA, that investment is a cropping-play only, with no connection to the beef industry.
Elizabeth Downs was understood to be listed in an off-market campaign by specialist property agency, Colliers International, handled by Rawdon Briggs and Tom Warriner.
The property is owned by Melbourne QC Allan Myers, who owns the adjoining, larger Tipperary holding to the east. While Tipperary has been leased to AA Co for some time, Elizabeth Downs has been managed separately.
Speculation continues to circulate that the Elizabeth Downs buyer, or perhaps other Chinese interests, may make a play for Mr Myers larger Tipperary holding itself, on the eve of the launch of the Australian Agricultural Co’s Darwin abattoir.
The type of production likely to be generated out of the AA Co plant is deemed to be ‘ideal’ for China’s enormous ‘hot-pot’ market, where meats are slow-cooked for hours in a broth. The move on Elizabeth Downs is seen by onlookers as a means of shoring-up livestock supply to begin to service that market.
It is unclear whether that attempt to more strongly influence delivery means that Elizabeth Downs’s new Chinese owner will come to some service kill arrangement with AA Co, maintaining product ownership through the plant.
It is understood the Chinese buyer for Elizabeth Downs has existing investments in tourism and other ventures in Australia, but not in agriculture/food processing.
While no sale price was disclosed, property searches indicate a figure of $11.5 million was paid, plus a significant herd value. Elizabeth Downs currently carries about 9000 head, suggesting a total purchase price of somewhere around $17 million.
A number of other NT land assets are understood to have come under recent scrutiny of potential Chinese investors.
Allan Myers is also marketing his Douglas property, to the east of Tipperary. He also tried to sell the ‘jewel in his crown’, Tipperary, four years ago to AA Co, but the move was rejected by AA Co shareholders. It is understood the property has remained on the market in a low-key format, in the lead-up to the opening of the Darwin abattoir.
Another large NT property, 1400sq km Moroak, in the Roper River district, has also been connected with possible Chinese interest, but Beef Central understands that process has now ended, without a result.
Colliers’ Rawdon Briggs said he could not confirm or deny that Elizabeth Downs had been sold, or a purchase price, but did confirm that he and Tom Warriner had spent two weeks in China last month, and some of the interest groups they had spoken to were now “showing interest in other northern cattle assets.”
Mr Briggs said every Chinese investor he had ever spoken to about potential investment in Australia was interested not only in the ‘now’, but also about what the property might be utilised for in future, in terms of cropping prospects or other diversifications.
Given the timing of the Chinese investment in Elizabeth Downs, speculation has now emerged that it may be connected with a pre-emptive strike by a Chinese investor, in advance of possible changes in market access that would allow live feeder cattle to be exported from Australian to China.
The market access prospect has been discussed at length over the past 12 months, often based on nothing more than hearsay and speculation, but momentum appears to be growing in this space.
A live export access agreement to China would certainly have an impact on the marketability of northern Australian cattle properties likely to come within the catchment area for export.
Elizabeth Downs has a carrying capacity of around 13,500 head, and is currently being managed by David Warriner. It features extensive flood-out marine plains country, providing strong seasonal attraction.
If the bare price of $11.5 million proves to be accurate, it would value the property a little above the recent Labelle Downs/Welltree sale on a beast area basis. Labelle/Welltree was bought by AA Co, including cattle, for $27 million.
While it was a similar size as Elizabeth Downs, the area of marine plains is much more extensive on Labelle, and there is a lot more high country on Elizabeth Downs.
Beef Central understands that existing management has been retained to operate Elizabeth Downs, using local expertise.
Darwin-based rural valuer Frank Peacocke from Herron Todd White told Beef Central today that the sale of Elizabeth Downs represented the first time he had seen Chinese interests buying in the NT in his 15 years in the region.
He said there had been a notable increase in the rate of buyer inquiry in recent months.
“Interest for the last month or two has been relatively strong compared to the last three years.”
He said the amount of due diligence work HTW in Darwin was being asked to do had “picked right up” during that time.
In another recent smaller northern cattle sale involving foreign buyers, the 5000ha freehold block Edith Springs north of Katherine, which offers wet-season access, was bought for $4m by Indonesian interests last month, potentially for depot work for live exports.