Property

Weekly property review: Border patrol stops the rain

Guest Author, May 8, 2019

Despite dry conditions, CBRE recently sold the Mundulla Aggregation, a large-scale dryland farming and grazing enterprise west of Bordertown in SA covering 911ha, for more than $8 million to two local buyers.

 

STATE of Origin has reared its head early this year with rain in Queensland seemingly refusing to cross the border into NSW, providing many northern producers with a winning start to the year.

The good northern rain in February and March has seen a surge of quality property listings in western Queensland, however, the rest of eastern Australia is in the grip of drought with the market still looking for rain.

Antony Glynn

Moree-based property agent Antony Glynn from Glynn Agriculture expects there will be sales in northern New South Wales, but not until the season breaks.

That view is reflected in a separate property item focusing on western NSW, click here to access.

“The region remains extremely dry and that explains why the property market is not bouncing back hard,” Mr Glynn said. “There is still confidence, especially in the light of a strong cattle market, but seasonal conditions are making life tough.”

Mr Glynn said over the coming months, rain would be the key.

“Rain will determine what, if any crops are planted. For instance, timely rain would ensure more feed such as oats, and that could kick the property market along.”

Mr Glynn said despite the conditions, there was still plenty of inquiry for good quality assets.

“Weather is not affecting inquiry for scalable grazing operations with a $5m plus price tag. A good balance of corporates and farming families looking to expand operations are seeking places that can run more than 1000 breeders, but listings are few and far between.”

He said these buyers were not ‘grass hungry.’

“They are patient, long-term investors who are looking beyond the current seasonal conditions. Most of the inquiry is for country in the higher rainfall, eastern New England.”

Richard Gemmell

Richard Gemmell who manages Elders’ central western NSW office reports appetite for country is still very positive in his region.

“The rain has been patchy, and while the region has received some good falls, other parts have missed out completely. However, that hasn’t dampened enthusiasm with buyers still proactive in the marketplace with listings that are in reasonably short supply,” he said.

Mr Gemmell said there was a considerable number of different buyers from nowhere in particular.

“They range from farming families looking over the fence at neighbours, within-district buyers seeking larger holdings, out-of-district buyers wanting to establish themselves for breeding opportunities and corporates and larger agri-businesses on the hunt for bolt-on acquisition to their existing portfolios.”

Mr Gemmell said all areas of the market were competing and as a result, land values had increased.

“Most buyers are taking a long-term approach, accepting that seasonal conditions come and go. For instance, maintaining a breeding herd is outweighed by the driving forces behind agriculture which remain very strong – commodity prices and interest rates. These factors improve equity and retire a degree of debt.”

Will there be a flush of listings once it rains? Mr Gemmell thinks only time will tell.

“There are some potential vendors waiting for the spring, but those going to market, in spite of the drought, are still achieving very good results. In the current market, the competition is strong enough to deal with that. It is all about confidence – if there’s confidence, transactions will continue to occur.”

Queensland

Andrew McCallum

Dalby-based Andrew McCallum from Ruralco Property GDL admitted it had been the quietest start to a year for a very long time in his patch.

“It is season related. There just hasn’t been the feed or the opportunity to present properties to the market, however I am expecting a turnaround in transactions in the next six months,” he said.

“Since rain in March, there has been some activity around Quilpie and there is a very strong market in Longreach and Winton following good falls.”

Mr McCallum despite a lack of listings, there are still plenty of buyers.

“There will more selection once it rains, but I don’t believe there will be a surge of listings. Right across the market, there is a good sprinkling of buyers from internationals to corporates and larger family operations seeking expansion.”

Cunnamulla inquiry lifts

On the other hand, Mr McCallum’s Cunnamulla counterpart Nick Dunsdon reports his phone has been running hot following a good recent autumn break.

“The property market here has been very quiet due to the dry conditions over the past six to 12 months. Over Easter, the district received 100mm of rain and a further 25mm a week later. So, I am expecting more activity once producers get themselves organised.”

“Most of the demand is coming from drought-stricken northern New South Wales producers chasing grass,” Mr Dunsdon said.

Victoria

Despite some rain across north-eastern and central Victoria and in the Gippsland last week, the state is still dry.

Matt Childs

Melbourne-based Matt Childs from the rural and farm property specialist agency Pat Rice & Hawkins said listings were picking up as a result.

“Supply was tight in March and April, but in recent weeks it has started to improve following an autumn break. The question is whether the trend will continue now that the cold weather has arrived, and winter is on its way.”

Mr Childs said soil temperatures were still quite high.

“Victoria experienced 30-degree temperatures over Easter and there have been no frosts to date, so follow-up rain should result in substantial grass growth.”

“It is just about getting some green on the ground. Vendors don’t want buyers coming through their property if it is looking desperate,” he said.

Mr Childs said broadacre properties were selling the best.

“Properties spanning more than 400 hectares are proving the most popular with existing farm families who are seeking expansion, as well as from new money.”

South Australia

Potential sellers in South Australia are delaying bringing their properties forward because the rainfall hasn’t come, according to Phil Schell, CBRE Agribusiness’s Adelaide-based director.

Phil Schell

“There’s been virtually no rain since July/August last year. As a result, there is no subsoil moisture. It’s a desperate situation.”

Last week, around 5mm to 15mm fell, but Mr Schell said it was not enough to open a season.

“We are so far from an opening, it’s critical and as a result, it will impact decision making for this season’s plantings. There are virtually no grazing properties on the market and very few producers are interested in listing.”

“I can’t remember a time when property stock was this low for both the first and second quarters of a calendar year,” he said.

Mr Schell said despite the conditions, there was strong buyer interest for grazing properties.

“Producers from South Australia, southern Northern Territory and New South Wales are looking for properties they can finish stock on – clover or lucerne country, water or irrigation.”

“The time of year does not have an impact on buyers. On the other hand, sellers are nervous about going to the market at the wrong time. I don’t believe there is a wrong time,” Mr Schell said.

He reports strong demand in South Australia’s highly productive south east region.

“Over the past two years, property values there have risen 30 to 40 percent because demand is outstripping supply. With stable prices for cattle, goats, sheep and wool, there is money and buyer demand for quality assets in the area.”

Mr Schell said the current seasonal conditions would not deter some buyers.

“While they might slow their eagerness to purchase, corporates and family operators seeking scale are interested in securing country for the next 10 to 20 years, or the next couple of generations.”

Mundulla aggregation makes $8m+

Illustrating this, CBRE recently sold the Mundulla Aggregation, a large-scale, integrated, dryland farming and grazing enterprise west of Bordertown.

The five non-contiguous properties spanning 911ha (pictured at top of page) are highly regarded for livestock breeding and finishing, as well as winter cropping. Mundulla attracted strong competition and was sold for more than $8 million ($8800/ha) to two local buyers.

The only other South Australian grazing operation being marketed by CBRE is Munga Park, a former Simmental stud.

Located 4km north west of Frances and 39km from Naracoorte, the 2531ha aggregation is underpinned by three water licenses, as well as a reliable average annual rainfall.

Featuring developed pastures, quality cropping land, fertile soils, strong climate conditions and a strategic location, Munga Park is available for purchase as a single landholding or as five individual properties.

As one of the only grazing properties for sale in South Australia, it is expected to attract strong interest.

As one of the only grazing properties presently for sale in South Australia, Munga Park near Naracoorte is expected to attract strong interest.

 

 

 

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