Permanent crops to buoy Australian deals in 2018, says CBRE

Sheep and horticultural assets will be the hot-ticket items that continue to draw investor interest in ag Down Under, the real estate firm predicts.

The year ahead looks promising for the Australian agribusiness market thanks to surging commodity prices and the country’s close proximity to key export markets, according to real estate firm CBRE.

Investor appetite is expected to grow in 2018, particularly for sheep – meat and wool – as well as for horticultural assets.

According to Meat & Livestock Australia, a producer-owned non-profit organization, the increase in both sheep meat production and prices in 2017 highlights the strength of the market. “Current market signals are showing no significant change to international demand in 2018 and with the anticipated softer overall sheep meat production, this year should see continued support for prices,” MLA said in a January report for 2018.

As for horticulture, CBRE’s agribusiness director Danny Thomas expects permanent plantings, such as almonds and other edible nuts, as well as wine grapes, citrus, mango and avocado to be in strong demand.

The fitness of agribusiness

Asked whether he expects to see more transactions in the Australian agribusiness sector this year, Thomas told Agri Investor: “Yes, especially for the land suited to horticultural purposes; yes, absolutely.”

“You’re going to see more of it happening in Northern Queensland. It’s a point of real interest and there’s a real immature water market there so there are some real arbitrage opportunities,” he added.

A strong flow of investment is projected to continue both from domestic and offshore investors, particularly from the US and Canada, as those investors seek geographic diversity and good-value opportunities that are lacking in their respective markets.

“There’s a real immature water market in Northern Queensland so there are some real arbitrage opportunities”
Danny Thomas, CBRE

Thomas expects transaction activity in Western Australia as well, where Ontario Teachers’ Pension Plan recently bought the Jasper Farms avocado orchard. “You’ll see some knock-on transactions there as other institutions really look positively at that part of the world to go and invest in some horticultural assets themselves.”

Citing the sale of the Sustainable Agriculture Fund, a portfolio comprising 17 properties spread across 27,000 hectares and five aggregations, which AgCap finished selling off at the end of 2017 for more than A$180 million ($143.8 million; €115.1 million), Thomas highlighted the depth of buyer demand and confidence in Australia’s agribusiness market.

“We expect the market to build on this in 2018, with a continued strong flow of investment into the sector.”