IN this week’s property review, Colliers valuer and national agribusiness director Stephen Cameron gives his take on the current state of the Queensland grazing property market.

Recently, Mr Cameron travelled across Queensland, giving him a good appreciation of where the broad rural property market is at.

Interestingly, he said there are no recent big standout transactions he is aware of in the grazing market.

Mr Cameron said he was aware of some producers who are sitting on the sideline, watching and waiting to see where the market is headed.

“There are a few pending off-market transactions in the sub-$35 million bracket, particularly in the wider Maranoa region. Those figures indicate there are no real hiccups in the market, however it appears to be tracking sideways.”

“When markets start to level off, producers show extra caution and are happy to adopt a wait-and-see attitude, unless it is a key asset that forms part of a larger strategic play for example a neighbouring holding,” he said.

Mr Cameron said transactions were still happening, but compared to recent years, there had been a reduction is sale volumes.

“In the Maranoa region, year-to-date sales volumes are at around 60 percent in comparison to 2023, and the Quilpie Shire recorded only one sale which was off market to a neighbour.”

“The Winton Shire is currently down 60 percent from the previous year and the Flinders Shire in North Queensland has had only two sales for the current year, down by 70 percent from 2023 and 2022.”

Sales rates in the region would need to finish strongly in the last quarter to remain on par, he said.

Carbon changes stall sales activity

Activity around Charleville and the state’s western mulga country had stalled, due in part to a lack of demand by carbon aggregators in the marketplace.

“They are sitting on their hands waiting until new methodology is approved,” Mr Cameron said.

Two or three years ago, he noted numerous aggregators floating around the region buying country for the asking prices, with favourable buyer terms to conduct their due diligence into the feasibility of the project prior to settlement.

“Those transactions were potentially inflated because of the terms of the sale. For the vendor to agree to such terms, they wanted top dollar and that broadly gave the perception of significant uplift in values without having consideration for the terms involved in the sales.”

With the expiry of the Human Induced Regeneration (HIR) methodology in September 2023, Mr Cameron said the market over the past 12 months had been less influenced by external drivers such as carbon aggregators or speculators where the market has moved back to traditional agricultural demands.

“Once the Clean Energy Regulator releases the new methodology, it will be interesting to see whether those aggregators re-enter the market, as there is potential for pent-up demand.”

“In the meantime, it appears any properties without an existing carbon abatement project specifically relating to the former HIR are being purchased by cattle producers in western Queensland,” Mr Cameron said.

Market shift

A number of rural sales specialists have suggested there may be an influx of property listings this spring. Mr Cameron said if that view is correct, it has the potential to shift from a seller’s market into a buyer’s market.

“Over the last five years, there hasn’t been much stock available for sale. Looking at the sales trends, property sales are down across the board, however listings appear to be increasing,” he said.

Some properties had been sitting on the market for an extended period, which maybe a reflection of inflated vendor price expectations or re-adjustment of market relativity – where external factors that have previously influenced the market, no longer exist.

Property market tracking sideways

Mr Cameron said the signals for the beef sector were looking positive in terms of climate outlook and cattle prices.

“Overall, cattle prices are quite strong for the end of winter. However, many potential sellers and buyers are waiting for that first spring rain (that could arrive within weeks) which will likely create further confidence in the cattle and property markets.”

“I believe the market is currently tracking sideways, where ‘time on market’ will become important to the successful transaction of a property, but more importantly for those B-class assets that may not attract the same interest to a blue-chip property.”

If vendors expectations are inflated, then properties won’t sell. They will sit on the market and that creates a certain stigma over an asset

“If on-market for an extended period, by the time the vendor meets the market, they have potentially lost purchasers who have moved on to another asset. So, it further limits the buyer pool.”

Mr Cameron said potentially, those vendors may have to accept a lesser figure – it is the simple fundamentals of selling, but just as important to engage a suitable agent to maximise the market exposure and or target the correct buyer profile.

“If vendors expectations are inflated, then properties won’t sell. They will sit on the market and that creates a certain stigma over an asset.”

Mr Cameron said the improvement in the cattle markets, further assisted by a low Australian dollar, had reaffirmed confidence within the beef sector.

From a national perspective, he noted that there had been regressions in some sectors of the grazing property market, particularly in southern New South Wales and areas of Victoria.

“Broadly, the Queensland market has demonstrated firming value trends into 2024, however in comparison to those southern states, in some instances the market levelled off in 2022/23.”

Therefore, he said, Queensland had seen strong demands for a further year by comparison, although notably there was a lag in the initial strengthening in market activity.

Season

Mr Cameron said this time last year, market confidence was very different based on BOM’s prediction of a dry summer.

“If that widespread rain didn’t eventuate in November, the property market in Queensland would likely be very different today. Ultimately, the improvement in the seasonal conditions provided a floor in the cattle price which was on a rapid decline in late 2023.”

Mr Cameron said once again, the biggest risk in the property market was the season.

“If there is good spring and summer rain and we don’t fall into dry conditions, the property market is likely to track sideways for a period, as prices readjust in certain markets and as more stock becomes available.”

“If purchasers have more choice, they will be more selective and less likely to engage in a buying frenzy to secure a property in fear of missing out,” he said.

Strategic buying

Mr Cameron said conversations in the market were changing, with landowners or potential purchasers looking to acquire or divest more strategically.

“Recent cycles, partly driven by succession (ie. buying more country for the next generation), are largely over, and producers are making sure their business is operational and that strategies are in place for the older generation to exit.”

Large listings

Overall, Mr Cameron understands there is currently a number of large-scale grazing and farming assets available in Queensland that have not yet transacted.

“These include a 23,595ha Darling Downs farming aggregation, a 61,000ha mixed farming aggregation east of St George, 13,740ha farming aggregation near Goondiwindi, 16,000ha Taroom scrub grazing property and the portfolio of some 227,000ha spanning from St George to Charters Towers just to name a few.”

He said there had been fewer quality assets marketed simultaneously for some time, especially under private treaty which was likely a reflection of slowing market conditions.

“These assets, combined with other listings, will be a real test to the depth of the market.”

Stand-out recent transactions

A recent stand-out transaction had been the Worral Creek Aggregation near Talwood, which reportedly made circa $355 million inclusive of significant water entitlements.

Mr Cameron said the sale was significant given its value quantum and followed on from the 2021 sales of South Callendoon and the Kalanga Aggregation.

Additionally, he said the Queensland Foreign Land Tax was impacting appetite by foreign companies or trusts that currently had land assets or wanted to acquire in the state.

“It forms part of the investment decision as perceived as an additional cost of operating, therefore impacting on those decisions to hold or acquire country in the north-east of the country.”

Grain view

Mr Cameron said many Queensland grain producers were still concerned about the cost of production.

“It is not getting any cheaper to fertilise, plant and harvest. Producers don’t want a poor season and spend money on inputs, not to get a return. Conversely, there has been a recent softening in farming commodity prices, particularly in barley, wheat and cotton.”

He said the uncertainty had been caused by the huge amount of grain harvested in the United States, and that could impact Australian grain prices.

“Overall, the broadacre farming market will have its own challenges, however the firming demand for further water security with be fundamental component of property values moving forward.”