Rural agents bet on farmland boom

Farm Weekly | 1 June 2015

Rural agents bet on farmland boom


COMPETITION is growing between Australia's major rural land selling agents as farm sales volumes are expected to come out of a trough and major institutional and private investors seek to gain a foothold in the growth area of agriculture.

Elders chief executive Mark Allison, who saw the rural services company sell more than $1.4 billion in real estate last year, is taking on the new entrants of CBRE and Colliers International.

He is aiming for 12 real estate agency acquisitions next financial year and 40 by fiscal 2017.

"Elders did experience deep financial stress for five years so there had been little investment but since then we have been investing - we see real estate as a growth area," Mr Allison said.

"We have appointed people in China, and that is paying off in terms of contacts, but it is still yet to convert to sales."

CBRE's head of agriculture Danny Thomas acknowledges the level of competition.

"This move by CBRE is in response to the natural extension of our current global client base," Mr Thomas said. "What does this mean for the likes of Elders and Landmark? It could mean they move towards the sub-$10 million family farm properties for which they are probably better placed."

The CBRE team sold Inghams Enterprises' $550 million property portfolio as well as other holdings such as Sir Graham McCamley's Queensland properties to one of Canada's largest pension funds.

Colliers has also participated in a major swathe of corporate rural land transactions selling parcels of land from the former PrimeAg Australia portfolio to US financial services giant TIAA-CREF and other rural holdings to Chinese investors.

Traditional rural property agents, such as Landmark Harcourts - part owned by Canadian fertiliser company Agrium - have had a history of selling major corporate property such as Swire Group's $300 million Clyde Agriculture. Other major agencies such as Ray White and boutique companies such as Meares & Associates, have also dominated major parts of the market, either by sector or geography.

"There is definitely a real push on," Ray White rural chief executive Paul White said. "The competition is certainly putting some effort into it and that has put some pressure on us to get some more international activity. We are now putting in a lot of effort into rural internationally."

Another new entrant Raine & Horne has also made a splash, announcing that it was currently working on behalf of a co-operative of cotton farmers looking to invest about $100 million in NSW, as well as a further $500 million to invest on behalf of overseas groups seeking to secure a large portfolio of cropping interests.

Co-Principal of Raine & Horne Rural Sydney Andrew Tout said there had been an increased level of inquiry from Asian investors following the signing of the China Australia Free Trade Agreement last year.

"It's a combination of both institutional players and individuals looking to physically relocate to Australia."

Australian Pastoral Group, set up by former Macquarie Pastoral Services managing director Alan Hayes, has bought $70 million worth of rural property.

As an investor Mr Hayes believes the agency that wins will be the one with the best on-ground knowledge and selling network.

"I think the agents are betting on increased sales from migrating capital or increased distressed sales," Mr Hayes said.

"There will be a lot of people trying to get in because it's simple money, but I think a little competition might also knock the commissions down."

Original source: Farm Weekly

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