Buyers hoping for some heat to come out of the rural property market heading into Christmas are likely to be left disappointed, according to JLL.
A combination of low interest rates, high commodity prices, good seasonal conditions and an undersupply of farmland relative to demand is expected to drive prime farmland values even higher over the final quarter of the year, amid forecasts the agricultural sector will deliver a record $73 billion of produce this financial year.
“For the remainder of 2021, we are going to continue to see more buyers than there are properties on the market,” said JLL agribusiness director Geoff Warriner.
“The fourth quarter of this year will remain just as strong as the first three, which takes the market into new territory in terms of consistency of demand over time.”
According to the June quarter update of the Australian Farmland Index, farmland used to grow crops and graze livestock delivered a whopping 46.3 per cent annual return, of which 32.8 per cent was capital growth.
More broadly, agricultural land prices are forecast to jump 10 per cent this year, easing to 8 per cent next year, according to Rabobank.
“The beef and livestock sector for example is reaching extremely high levels of demand, due to the reduction in the Australian national herd as a result of extended drought. This will be the case until the national herd is re-populated, which will take a few years,” said Mr Warriner.
Mr Warriner, who along with his JLL colleagues, has sold around $130 million of farmland in the past few months, said some of the values they were witnessing “pushed the envelope in terms of profitability as an isolated asset.
However, he said buyers were averaging out these new values across their existing portfolios.
“Spread over the balance of an existing portfolio of land, water and livestock, it all of a sudden makes a lot of sense,” Mr Warriner said.
Among major sales negotiated by JLL were two cotton farms – 1723-hectare Garrawilla and 518-hectare Belmore – in the Border Rivers region of far northern NSW.
Mr Warriner said the $38 million sale, which included almost 7300 megalitres of water entitlements, set a new benchmark in terms of water values in the region.
The property was sold in two portions east and west of the Carnarvon Highway to local families.
Records show one of the buyers was Alerin Farms, owned by Peter Corish, a director of Infrastructure Australia and a former president of the National Farmers Federation. Mr Corish is the chairman of the Corish Group of agricultural businesses.