Record rural property prices as market hits uncharted territory

Prices for rural properties show no sign of stopping, with farms breaking records and a flurry of new multimillion-dollar listings.

Pehuen Park at Tallangatta South sold for a huge price recently.

AUSTRALIA’S rural property market has been catapulted into uncharted territory on the back of a flurry of record prices and multimillion-dollar listings.

A perfect storm of low interest rates, better seasonal conditions, buoyant commodity prices and strong investor appetite is said to be behind the red-hot market, which experts believe shows no signs of stopping anytime soon.

In the past week:

MAJOR landowner Macquarie Agriculture listed its Lawson Grains business, including 105,000ha of prime cropping land in NSW and Western Australia, for sale with industry sources saying it could fetch as much as $600 million.

MINING magnate and rich lister Gina Rinehart offered seven of her cattle stations in the Northern Territory and Western Australia, totalling almost 1.9 million hectares and worth an estimated $300 million.

MACQUARIE increased its bid for major citrus-orchard owner Vitalharvest to $314.8 million – up from its initial $300 million offering late last year. The Vitalharvest portfolio includes four berry farms in NSW and Tasmania and three citrus properties in South Australia.

The major offerings come as farm prices reach record highs in Victoria. A dairy farm at Tallangatta South in the state’s North East recently fetched more than $37,000 a hectare while a cropping and grazing property at Yalla-Y-Poora in the Western District last week sold for $23,588 a hectare, smashing expectations.

The $15,445 a hectare paid for a cropping farm at Marnoo, in the Wimmera, last week is also understood to be a record.

Brad Jensen from Ararat Ballarat Real Estate, which handled last week’s sale of the 179ha Yalla-Y-Poora property, said he was astounded by the price – achieved at auction – and believed it would spur more sales.

“It was certainly well above where we were expecting the price to land. It really is a huge result for the region,” Mr Jensen said.

Rural property specialist Danny Thomas, from LAWD, said the top of the property market was in uncharted territory.

“We have a unique set of circumstances at the moment with farmgate positivity and both the economic and agriculture outlooks,” Mr Thomas said. “The industry weathered the COVID storm better than anticipated. Vast pools of new money are now looking at ag.

“It is going to be a call to action for a lot of people who have been sitting back and thinking when is the right time to sell. It’s a very strong market and my advice would be to absolutely sell now.”

CBRE’s Shane McIntyre said rural property values had reached unprecedented levels, with a continuing insatiable appetite.

“The question is asked continually, can this keep going, and the answer is reliant upon three key ingredients … low interest rates, continuing commodity prices, and supply of property,” Mr McIntyre said.

“While all these factors remain in their current phase, the market will continue to experience strong demand, and a resultant increase in values. Any significant change in one of these components will slow down value rises, and a likely pause in the market will occur.”

The Lawson Grains offering follows a maturation of the 10-year cropping-specific fund which has purchased more than 70 properties and built them into 10 aggregations. Should it realise the $600 million rumoured asking price, it could be one of the biggest single farmland deals in Australian agricultural history, behind the $854 million takeover of Webster Limited by Canada’s PSP Investments in 2020 and its $850 million-plus purchase of Olam Orchards almond and water assets the same year.

NSW cotton giant Auscott Limited, owned by the Boswell family of California, is also on the market for about $600 million.

Industry sources expect the Lawson portfolio to attract widespread domestic and international buyer interest. The sale is being handled on an expressions of interest basis.

Lawson Grains is one of three of Macquarie Group’s three agriculture-specific investment funds, along with Paraway Pastoral and Viridis Ag. Their combined assets are valued at almost $3 billion.

The Weekly Times understands the maturation of the Lawson fund will have no impact on the continued operation of Paraway and Viridis. Paraway was launched in 2006 and now operates more than 4.48 million hectares across 27 stations. Viridis operates 11 properties, having purchased its first farm in 2018.

Based at Albury in NSW, Lawson Grains comprises about 90,000ha of arable land which last year produced more than 250,000 tonnes of grains and oilseed.

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