Colliers International report finds agribusiness sales above $5 million increased by 30 per cent in 2019
The number of Australian agribusiness sales above $5 million increased by 30 per cent last year to reach $4.3 billion. See which state achieved the most capital investment.
THE volume of Australian agribusiness sales above $5 million increased by 30 per cent last year to reach $4.3 billion, according to a major report released on Monday.
The Colliers International report found the 4.3 billion figure was up from $3.3 billion in 2018 and was the highest level of capital investment in 2019.
Colliers International head of agribusiness Rawdon Briggs said “the Queensland market attracted the largest 2019 capital on farming properties across Australia of $1.3 billion off the back of over 90 transactions”.
“Meanwhile, Victoria remained the second largest farmland investment market in Australia for the second consecutive year, reaching an estimated volume of sales of $1.2 billion in 2019, while investment volumes on farming land in NSW reached $1.1 billion, underpinning over 25 per cent of the annual capital investment across Australia in 2019,” Mr Briggs said.
Meanwhile, the report also found Australian farms will continue to appeal as a strong alternative investment option for those seeking long-term returns and portfolio diversification.
It found despite current worldwide uncertainty Australian food production remained in strong demand across the globe due to its reputation, counter-seasonal production and proximity to Asia.
“As demand for Australian agribusiness products continues to rise, Colliers International anticipates an upward trend on investment demand from corporates and institutions, particularly for assets offering vertical integration opportunities, water permits and licenses and favourable global trading conditions,” author Karina Salas, said.
“Over the past few years, Colliers International has witnessed the surge of global sophisticated investment players into the Australian agribusiness investment market, with Canadian and American pension funds and to significant lesser extent corporates actively.
“These players generally have a long-term view of the drought and climate risks, remaining cautious and supporting investment decisions with a conservative feasibility analysis including the identification of relevant strategies to mitigate”.
But the report found investment opportunities were topped to be limited this year, with an increase in off-market transactions as buyers attempt to deal direct to secure favourable terms under reduced competition.
Ms Salas said it was also unknown what impact temporary changes to the Foreign Investment Review Board would have on future offshore agribusiness acquisitions.
The Federal Government recently introduced changes to the FIRB, and all investments now require FIRB approval regardless of the value or the nature of the foreign investor. Review time frames have also been extended form 30 days to six months.
“Albeit in the first instance we envisage the opportunity for domestic institutions like superannuation funds to extend their investment activity in the Australian agribusiness sector,” Ms Salas said.
“The scale of the impact of the COVID-19 outbreak on the Australian economy and the capital markets of agribusiness assets is still unquantifiable.
“Some of the potential effects could include the halt of investment opportunities reaching the market, the disruption of capital flows, the international and state boarder travel restrictions limiting site inspections and the loss of market value of companies listed in stock exchange markets”.
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