Value of foreign investment in Australia surges 45 per cent

Foreign appetite for Australian farmland has grown significantly. See who the biggest investors are in a record $8.5 billion year.

Foreign investors are hungrier than ever for a slice of Australia.

Australian agriculture was awash with foreign cash in 2021-22, with a record $8.5 billion worth of investments approved by the Foreign Investment Review Board and the Australian Taxation Office, an increase of more than 45 per cent on the previous period.

Canada continues to be the biggest foreign investor in Australia’s agriculture sector with $2.5 billion worth of purchases approved by FIRB and the ATO over the 12-month period, well ahead of Singapore ($1.43 billion), the US ($719 million), France ($568 million) and Japan ($409 million).

CBRE agribusiness managing director David Goodfellow said while farmland values had risen considerably, this didn’t necessarily equate to a corresponding increase in acreage purchased.

“There have been massive investments in horticulture and high-density cropping, considerably out of Canada and North America, and emerging growth from Europe and the UK,” he said.

CBRE agribusiness managing director David Goodfellow says investors are eyeing environmental opportunities in Australia not found elsewhere. Picture: Aaron Francis

Mr Goodfellow said interest in Australian beef was on the rise in Asia.

“We’re starting to see the re-establishment of interest from Asia into our beef sector now. There’s a strong demand for beef protein in Asian diets these days and that’s where we’re seeing this (investment) coming from. Whereas typically the interest from Europe and the UK is for opportunities in the horticulture and cropping sectors,” he said.

Amid the increasing importance of companies’ environmental, social and governance (ESG) credentials, Mr Goodfellow said Australia was seen as an opportunity to further businesses’ environmental standing.

“We’re seeing very significant interest from right across the world for environmental opportunities in Australia, whether for carbon projects or just looking after land more sustainably. We’ve got so much more land that lends itself to opportunities, whereas with farming land in Europe, productivity is maximised to its fullest.”

By December 31 last year, direct foreign investment in Australia totalled $1.1 trillion, almost a 3 per cent increase in a year.

The total number of investments was lower in 2021-22, at 7407 compared with 7614 in 2020-21.

The rise in the value of FIRB approvals comes despite an almost 500 per cent increase in application fees overseen by former treasurer Josh Frydenberg between 2019 and last year.

Those fees rose again on July 29 to generate an extra $455 million in budget revenue over the forward estimates.

The fee increases will see FIRB applications for agricultural land purchases start at $13,200 – up from $6600 – for acquisitions of $2 million or less and increase to a maximum of $1,045,000 – up from $522,500 – for purchases of more than $80 million.

Elders real estate executive general manager Tom Russo said the latest fee increases had become a bigger issue for investors.

“For people looking to do these transactions it increases the execution risk, it’s not just these fees they’re looking at, it’s agronomic due diligence, legal due diligence, and it adds up to a very big bill at the end of the day, so if you spend that money and don’t execute a transaction, it’s a bitter pill to swallow,” Mr Russo said.