Weekly property review: Farmland values in a climate of growing economic uncertainty

Property editor Linda Rowley, 21/06/2023


WITH listings easing and competition slowing, this week’s property review looks at some mid-year predictions for rural property demand, trends and prices.

Yesterday in Melbourne, CBRE Agribusiness director Matt Childs and PwC’s Jaclyn Hope addressed the issue during an Australian Agribusiness Farmland Values networking event.

Matt Childs

Mr Childs said nationwide, quality agricultural assets were continuing to perform well.

“Compared to previous years, the volume of competition is lower, but A-grade and turnkey assets have strong appeal and are attracting good competition from qualified buyers,” he said.

Mr Childs said the point of difference was that poorer-grade assets are having trouble transacting.

“Two years ago, the gap between ‘good’ and ‘poor’ assets was narrower. That has now widened because a portion of the market is sitting on its hands waiting for the right property to come along.”

He said today, buyers were compromising less.

“In recent years, when the property market was aggressive and competitive, some buyers were compromising more than they should.”

“Now, buyers are more patient about property purchases and consider whether it is suitable for their existing enterprise or business model.”

Mr Childs said there was currently a low supply of property listings and a backlog of buyers, unable to secure an asset, ready to transact.

“These producers may have previously competed for a hotly-contested opportunity and missed out during a period of record low supply, or they just haven’t found the right place.”


He said many producers had never been in a better position to buy land and a less competitive market gave buyers a better opportunity to secure the right asset.

“In the last two or three years, some vendors achieved better prices than expected. Now with a reduced volume of buyer competition, the market has returned to normality. The same level of capital growth is unlikely to be experienced in the coming 12 to 24 months.”

Mr Childs said existing primary producers had experienced two or three very good seasons, record levels of capital growth and so, from a balance sheet perspective, they were in a good position to acquire more land.

“On the flip-side, rising interest rates and falling commodity prices are being carefully considered and are ruling some potential purchasers out. That explains the reduced level of competition.”

He said buyers won’t focus on the coming season, rather, the investment will be a long-term play.

“Despite a challenging economic environment (high inflation, rising interest rates, softening commodity prices and strong indications of a possible El Nino), if producers are in a strong financial position and the right property becomes available, they will consider the acquisition.”

Significant build-up in cash reserves

Jaclyn Hope is a partner in PwC’s mergers and acquisitions team, with a specific focus on the food and agribusiness sector.

Jaclyn Hope PwC

She told the gathering producers, particularly on the east coast, had had three great seasons and built significant cash reserves – reflected by record high farm management deposits (FMD) balances of circa $6 billion.

“Many farmers are cashed-up and are in buy mode. There is no doubt this would be currently offsetting or assisting conversations with their bankers around access to new debt.”

Ms Hope said the market had seen and expected to continue to see, strong interest and strong valuations for good quality agri-farmland assets.

“Australian agribusinesses are no stranger to adjusting operations to cater for economic, market and seasonal dynamics. For instance, for beef and sheep producers, there will be an increased focus on stocking levels and profitability analysis around feed lotting and finishing.”

Ms Hope said agri-investors were unique in the way they looked ‘through-the-cycle’, taking a longer-term view when making investments.

She identified three buyer profiles:

  • Large family farming groups – there has been an increase of sizeable family farm operators behaving more like corporate investors.
  • Corporate / Institutional – seeking large-scale, asset-backed agribusinesses with strong cashflows.
  • Private equity – while this group has more of a post farm-gate focus, it also has an appetite for integrated agribusinesses.

Depending on the asset or opportunity, Ms Hope reports strong inquiry from all buyer groups.

“All sectors up and down the agriculture supply chain are showing good inquiry including a good mix of domestic and foreign investors,” she said.

“High quality grazing and grain properties command the most attention and demand for those assets should continue for the remainder of the year.”

“Vertically integrated operations are also attracting a premium driven by scale, margin capture and risk management.”

Like Ms Hope, Mr Childs operates in a market with institutions, corporates, high net worths and wealthy farming families.

“Many foreign and domestic investors are currently seeking opportunities to deploy funds into Australian agricultural assets,” he said.

Spring predictions

Mr Childs believes more properties will be listed this spring than in the two previous years.

“Producers have been reluctant to sell due to a string of good seasons, high commodity prices, exceptionally low interest rates and historically high capital growth. With the tables turning, landowners are now considering their options,” he said.






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  1. Michael Vail, 23/06/2023

    For those wanting to take the temperature of the investment-market and the picture of where we might be now, and expectations for the future, maybe consider reading this attached report … I rate this guy quite highly.

  2. Michael Vail, 23/06/2023

    With current mean farm-gate price for meat-on-the-hoof at around $2.65 per Kg. The expected revenue-budget has fallen around 45% from around $4.80 per Kg. barely around one year ago … and, EYCI has more than halved.

    Input costs to farm-production are currently rising at around 8.5% (+/-) per Annum, plus interest-rates rising around 180% movement above the lower-levels from a year ago, and the Wage-rises have not yet commenced … the 1970’s style StagFlation ‘squeeze’ is occurring as I write … with rising consumer prices and falling revenues as the recession approaches, combined-with falling real-asset prices of the sheep/cattle station that underwrites ‘everything’ (as land-prices are mean-reverting to long-term trend).

    There be pain ahead for many … sadly … and the subsequent and consequential drawing-down of precious capital reserves and savings; just to pay operating-costs as the necessary adjustments wash-through the system.

    It’s a five to ten year recovery story … and an expected 3-year El Niño (+/-) drought-period expected by year’s-end …


  3. Graham johns, 22/06/2023

    If large family farming groups are behaving like corporates this will drive property prices down.
    As corporates do their homework and compare apples with apples lets consider that a rural property is actually a business, in a business world if the value of what you are providing goes down so to does your bottom line, this then adjusts the value of the business. In real world terms the value of farming commodities has fallen 20 – 30 percent ( this should be considered the new normal as prices were too high to be competitive) on top of huge and rising input costs. This in reality surely should mean a fall in property values directly proportional to the 20-30 percent fall in the bottom line. This in time will make the industry a more comfortable long term investment and allow young families and new industry entrants their chance to buy.

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