Rural sector set to reap from rising investor demand for resilient agribusiness assets

Panic-buying of grocery staples and the resilience of the agribusiness sector amid the coronavirus pandemic have put Queensland’s rural properties firmly on the investment radar.

The resilience of Queensland’s rural assets has led to the emergence of its agribusiness sector as a “solid alternative investment asset”.

THE bush is not coming to the city for Brisbane’s iconic Ekka this year but there is a renewed focus from the big smoke on Queensland’s rural assets.

Panic-buying of grocery staples and the resilience of the agribusiness sector amid the coronavirus pandemic have put its properties firmly on the investment radar.

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The rural market also has been buoyed by favourable seasonal conditions, strong commodity prices, low interest rates and the competitive advantage of a weaker Australian dollar.

According to property analysts, the flow-on is expected to be increased demand for agricultural holdings from high net worth investors, corporates and institutional buyers.

But there are still some headwinds, including threats to global supply chains, disruptions to capital flows and the introduction of new Foreign Investment Review Board rules.

Bowen Downs Station near Muttaburra in centralwest Queensland.

Nevertheless, JLL agribusiness director Chris Holgar said despite the challenges it was likely the sector would prevail as “one of the most resilient in the aftermath of COVID-19”.

“It speaks to the resilience of the sector and to the strong underlying market fundamentals that confidence in the immediate-term profitability of operations is noticeable in the property market even as the health and economic implications of COVID-19 remain fluid and develop at a rapid pace,” he said.

In a sign of the sector’s positive outlook, Leeora Downs — a 3560ha freehold pastoral holding in Queensland’s Arcadia Valley — and the historic Bowen Downs station — a 62,805ha aggregation in the state’s centralwest near Muttaburra — were both recently placed under contract prior to auction. They were marketed by Mr Holgar and his JLL colleague Geoff Warriner.

“It is clear that motivated vendors have not been deterred by the developing COVID-19 situation and well-capitalised investors are actively pursuing opportunities,” Mr Warriner said.

According to the latest Colliers International Agribusiness Research and Forecast Report, the Queensland market is positioned with high investment appeal. Last year, it attracted the largest capital spent on Australia’s farmland of $1.3 billion across more than 90 transactions.

Leeora Downs in Queensland's Arcadia Valley.

Colliers’ associate research director and report co-author Karina Salas said the agribusiness sector had “risen to the fore” during the coronavirus crisis and continued to emerge as a “solid alternative investment asset”.

“Despite the negative economic conditions and market uncertainties, we know that demand for food will never cease which provides a bulletproof scenario for the agribusiness sector, supports its long-term financial sustainability and positions the sector as a key driver of the recovery process,” she said.

“As such, we expect to see an increase on demand for Australian farmland from sophisticated/institutional investors looking for diversified opportunities with a long-term investment view.”

In the new report, Ms Salas indicates the current market conditions favour “sophisticated domestic high net worth investors with a solid cash position”.

She also said that while the impact of changes to FIRB regulations on future offshore agribusiness real estate acquisitions was still uncertain, it was envisaged as an “opportunity for domestic institutions like superannuation funds to extend their investment activity into the Australian agribusiness sector”.

“The outlook for the investment market in 2020 is steady and driven by the consistent increase in demand for agribusiness products,” she said.