Australian family farmers are competing with corporate entities and institutional investors in a hot property market, according to CBRE Agribusiness managing director David Goodfellow.
Speaking to Agri Investor, Goodfellow said many farmers who had recovered from the drought with strong balance sheets are now looking to expand their operations again.
“There’s still genuine interest from the corporate sector and from foreign capital, but the family farming businesses are now stepping up again and having a red-hot crack,” he said.
“This new generation of farmers are just so enthusiastic about agriculture and are really keen to see their family businesses expand, taking advantage of opportunities to expand those businesses locally. Almost all of the family businesses coming to look at land are mum and dad, with their kids – who have typically been away to ag college but have come back home for the last few years, and have confidence in the industry and what they can bring to those farming businesses.”
The reasons for this increased interest and participation in the property market from family farmers are twofold, Goodfellow said.
“Certainly, there’s been a strong recovery and the outlook for commodity markets is positive. But this new generation can see how a new way of managing agricultural resources in the future can work – that’s largely around technology and automation. Since the drought, they’ve had a couple of years to prove these new ways of managing farm resources works. I think that new generation has more confidence and is keen to take on a bigger business,” he explained.
Foreign and corporate buyers are still very active in the market, too, especially for larger assets. Goodfellow said institutional investors, in particular, were being more strategic than ever with their purchases, particularly those that have already built substantial portfolios of Australian farmland.
“If they’ve got a lot of assets in one area, typically they’ll look to invest in a second or third area to diversify and manage risks. And others who have invested heavily in some commodities might want to spread their risk by investing in other commodities as well,” he said.
“The American, Canadian and European investment community has a bias towards broadacre cropping and horticulture. Local Australian investors and Asian investors are more keen on investing in our livestock, because there’s much stronger demand for our beef and sheep products in those Asian communities. There’s still demand for red meat in western cultures, but there is growing demand for our plant-based proteins.”
Land prices will “absolutely” continue to rise, too, Goodfellow said. A Rural Bank report this year found that farmland values had risen by 12.9 percent in 2020, bringing the 20-year compound annual growth rate to 7.6 percent.
“We’ve seen a big increase in our land values here over the last five years, but that’s really because we’ve come off such a low base. When you compare our land values with those elsewhere in the world, we’re still relatively cheap,” he said.
Goodfellow joined CBRE Agribusiness in February this year to head up its Pacific Agribusiness – Capital Markets team.
The firm has recently made two further senior hires to bolster its team: Matt Childs as director of Agribusiness Capital Markets and Adrienne (Boo) Harvey as an associate director on the same team.