WA'S farmland property market has had a huge year, with significant price increases and record trends across much of its most productive regions.
Demand came from neighbouring family operations, corporate and superannuation fund investments, high net-worth individuals and individual investors who saw the potential for investment returns, plus there was stronger interest from Eastern States' farmers eyeing off WA farmland.
In tightly-held areas in the Wheatbelt and Great Southern, prices have risen dramatically over the past year, with bumper seasons increasing farmers' equity and historic low interest rates making it a ripe time for expansion.
A burgeoning interest in carbon farming also had an impact in the pastoral regions, particularly from Eastern States buyers with carbon credits in mind.
Nutrien Harcourts WA western region corporate and business development manager Glenn McTaggart, said the company had achieved record figures for 2021 with sales volumes up 45 per cent and individual transactions up 35pc.
"The 2021 rural property market has seen a continued upward climb in prices, driven by strong demand and favourable seasonal conditions in most areas of the South West Land Division,'' Mr McTaggart said.
"We have a number of large-scale properties under contract in the $10 million-$30m range due to settle in autumn 2022.
"It is hard to see these numbers being eclipsed next year given the lack of listings coming through the system, however following a successful harvest some farmers approaching retirement may take advantage of the high prices to exit the industry."
Elders senior real estate executive Simon Cheetham said they had also experienced an exceptional year in 2021, with a significant increase in turnover.
National financial results, released in October, for Elder's Real Estate division showed it sold a record $1.6 billion worth of farmland over the 12 months to September 30, a rise of 25pc on the previous year.
Among the sales Elders' Real Estate group handled this year was the Ruby Plains and Nerrima portfolio of seven cattle stations, one feedlot and almost 110,000 head of cattle on behalf of Gina Rinehart's Hancock Agriculture, which sold for a combined price of about $100m in September.
"Twelve months ago when reflecting on the year that was 2020, we noted prestigious station sales, strong auction results and a sharp jump in farmland values, with 2021 taking all of these to whole new level,'' Mr Cheetham said.
"On the surface it would appear some parts of WA could see another year of 20-30pc growth in land values from what were already considered high prices.
"Price growth is being seen in almost all areas of WA, not just the coveted medium to high rainfall cropping and grazing zones, but also the larger properties in the lower rainfall areas of the northern and eastern Wheatbelt and the smaller lifestyle properties in some of the most desirable parts of WA."
Giving a good indication of current market prices, Elders Real Estate specialist Adrian Corker and auctioneer Don Fry sold the 442ha property Congella, at Kojonup, on December 2 for an estimated $11,538 per effective farming hectare, including improvements.
In comparison, a similar property Maybenup, at Kojonup, sold for $7234/ha in October 2020.
"This result for Congella proves the appetite for land in cropping and grazing areas remains incredibly strong,'' Mr Cheetham said.
Mr McTaggart said Nutrien Harcourts' tracking of prices across WA shires had shown some shires had experienced up to a 50-60pc price increase over the past five years.
"The shires of Dowerin, Mingenew and Wagin have all seen 60pc increases since 2015, while Dandaragan, Bruce Rock and Kojonup have increased about 50pc over that same period,'' Mr McTaggart said.
"But if we look at property values in the grain growing regions of WA compared to similar regions in the Eastern States, one would get the impression that there is still more upside in our land prices.
"The interest in WA farmland from Eastern States' farmers trying to expand has increased significantly over the past 12 months.''
The statistics back the specialists.
In its 2021 Agricultural Land Price Outlook, Rabobank forecast that Australia's heated farmland market would continue its growth trajectory over the next five years, with the rise to be its sharpest in the next two years, fuelled by a booming agricultural economy, favourable weather conditions and good rainfall, limited avialable land for purchase, farmers' well-lined pockets and their fears of missing out.
Eleven per cent of WA farmers, the highest rate in Australia, reported that they intended to buy land within 12 months.
The report backed up trends evident in the most recent Rural Bank farmland values report, released in September, which showed that the median price of Australian farmland increased by 12.9pc in 2020 - the seventh consecutive year of growth.
"For the first time in 15 years, all Australian States experienced growth in median price per hectare, demonstrating the resilience of farmland values through events as significant as the pandemic,'' the report stated.
WA's median price grew by 19.3pc in 2020 - its third consecutive year of growth - a figure only behind Tasmania (25.3pc) and ahead of New South Wales (15.6pc), Queensland (11.8pc), South Australia (10.9pc) and Victoria (6.9pc).
These extraordinary increases were despite a 14.5pc rise in transaction volumes, bouncing back from 2019's historic lows.
"Farmland values have risen strongly in every State of Australia and in many cases to levels not seen before," said Rural Bank chief executive officer Alexandra Gartmann.
Commenting on the Rural Bank land value report, Rabobank senior agricultural analyst Wes Lefroy said an analysis, in collaboration with Digital Agricultural Services, found 87pc of the variation in land prices was driven by strong commodity prices, farm productivity and low interest rates.
"The cost of funding remains at the lowest point on record, the Rabobank Commodity Price index remains at its highest point on record and production levels in 2020 were well-above average,'' Mr Lefroy said in May.
"Over the past six years nationally, these fundamentals have been the most supportive they have been over the past 30 years.
"Agricultural land is definitely a resilient asset, which is what has attracted a lot of investors into agriculture, because it can wear headwinds quite well.''
In WA, 2020 delivered record high and double digit land values across all the regions, a comprehensive Rural Bank report showed earlier this year, with the South Coast and northern agricultural areas, in particular, driving the overall median price per hectare growth.
"The South Coast has been particularly strong, as people have been prepared to pay for the insurance of rain,'' said Rural Bank regional manager - south, John Riley.
The trends prompted ANZ Bank to issue a warning that the record-setting farm property market risked over-heating and that, based on its trajectory, could jump by almost a third by the end of the decade.
Though farmland prices were trending up, it was a more mixed bag for regional home prices with CoreLogic's Hedonic Home Value Index report, released in July, showing only a small increase in 2.2pc for WA for the 2020-21 financial year, while the national regional market rose by 17.7pc for the previous 12 months.
In June, WA became the only State to record a decline in regional house values - with regional NSW (21.1pc) and Tasmania (20.8pc) both recording the highest annual growth rates.
And though regional WA property prices did rebound later in the year, it was still not enough to catch the growth in Perth's median house prices - defying a national trend which saw regional markets generally outperforming capital city counterparts.
The other arguably limiting trend was the lack of international buyers into Australia this year, due in measure to strong demand, high prices and COVID-19 restrictions preventing overseas parties from coming to Australia to participate in sales negotiations.
While agents had feared changes to Foreign Investment Review Board rules which came into effect this year would limit overseas investors, it doesn't seem to have been a major disincentive to foreign interests.
"Other than super fund investment, international buyers appear to have taken a back seat due to strong demand and increasing prices,'' Mr McTaggart said.
"It appears the FIRB changes haven't had a dramatic effect on overseas investment, but political relationships and money flow have restricted some international investment."
Mr Cheetham said overseas buyers already established in the Australian farmland market were continuing to show interest in it.
"However with closed borders and the fast moving nature of the property market, these buyers are struggling to get a foothold,'' he said.
2021's healthy market trends started from the get-go, with premium farm Karawa West, near Wubin, providing a "golden opportunity'' which could not be missed in January, when it was purchased for a "strong price" by a neighbouring farming family.
The sale of the 4578ha property, which was well-known in the region, benefitted from strong buyer demand, with selling agent Nutrien Harcourt WA's sales representative Brad King, Geraldton, saying "buyer demand is as buoyant as I have ever seen it for some time''.
"It has been harder to find quality properties than it is to sell them,'' Mr King said.
Buying became more creative: with options to purchase parcels and family farmers forging syndicates to snap up some premium properties, as record high prices made purchasing a whole farm more difficult.
This most commonly occurred when a property was offered for tender or expressions of interest, with an indication on the different parcels available and prospective buyers able to submit their offer an a single or multiple parcels.
Alternatively, two or more parties joined forces and submitted one offer as a syndicate and if successful, divided the property among themselves.
A syndicate successfully bought Glen Elgin Farm, Hyden, in September, exceeding price expectations with a final $5.48m bid for the 5196 hectare property.
"The farmland neighboured our existing property so we saw it as a good opportunity to increase our scale,'' said Elliot Mouritz, whose family and an undisclosed party formed the syndicate.
"We had done a lot of planning to buy the property and went into the auction with a very positive mindset.
"You never know when land is going to become available, especially land that neighbours your farm, so we didn't want to miss this opportunity.''
Openn Negotiation, an online auction platform, also come into its own in 2021, with more agents choosing the selling method for its ability to test the market and interest growing among farmers, who have become familiar with online livestock sales over the past few years and have come to appreciate their ease of use.
The platform offers an alternative to the live auctions or tenders or EOI processes for farmland sales and provides sales transparency and flexibility for bidders while keeping the identities of buyers and vendors private from other bidders and spectators.
In an early Openn Negotiation sale this year, Durawah Farm, near Durawah, showed the potential benefits when it sold for about 27pc, or $547,000, above the reserve price.
In June, a record price per hectare was achieved for the 49.07ha Elgin Country, Elgin, when it sold under the virtual hammer for $965,000 to a local diary farming family with five parties registered to bid and two battling it out during the bidding process.
"I thought this was the best way for the market to determine the value of the property,'' said Nutrien Harcourts WA sale representative and selling agent Chris Waddingham
In September, record farmland prices were set in Meckering, East Binnu and Bruce Rock when three properties were sold within three days to local family farmers under the virtual hammer.
Although there were fewer overseas investors looking at Australian farmland, Canadian-backed investment group Warakirri Asset Management showed it still had appeal when it launched a new fund in April, aiming to raise $500m to buy, develop and own and lease out farmland to high quality tenants.
Then in June, Warakirri bought the quality grain producing property Gurrady Farms, at Yuna, which had been farmed by the Pawelski family for 59 years.
The undisclosed - but record or near-record price - was reported to be $30m on a walk-in, walk-out basis for the 9408ha (arable) property, which it renamed Yuna Springs, and saw Warakirri add to its already large and diverse agricultural land assets in WA, New South Wales, Queensland, Victoria and South Australia.
Interest came thick and fast, when Macquarie Bank put its big farming business Lawson Grains up for sale in March.
The portfolio of six super-sized WA properties, plus four in NSW, was expected to fetch about $550m, with a rush of early interest shown by locally-based investment fund and agricultural rich-list identities and potential farming syndicates interested in selected properties.
It sold in September to a Canadian company.
In December Hancock Agricultural also signed contracts for two more properties in its portfolio, Willeroo and Aroona near Katherine, for a reported $60m in separate deals with two Australian farming families.
Prominent WA farming family, the Lesters, from Manypeaks, sold a prime 70,000ha parcel of NT pastoral land in February for $17m.
Pilbara-based Pardoo Beef Corporation (PCB) secured two coveted pastoral leases in the Kimberley as part of its long-term vision to build a $3 billion premium Waygu industry in the Pilbara.
Well-known farming businessman John Nicolletti continued his large-scale properties transactions, buying the quality Newdegate property Connawarrie in late May, paying close to the asking price of $17.85m and later ELD Farms, measuring 9160ha.
Mr Nicolleti has just listed for sale a porfolio of 45,057ha, divided between aggregations at Newdegate and Lake Grace.
Mining and pastoral magnate Andrew and Nicola Forrest in July bought the 221,408ha Jubillee Downs and Quanbun Downs aggregation, in the Fitzroy River, reportedly for more than $30m, after more than 14 expressions of interest were received.
In the same month, strong competition was also evident for Maroonah and Magaroon stations, near Ashburton, which span 307,012ha, reflected strong interest and a strengthened pastoral market, Ray White Rural WA director Simon Wilding said.
The Gagliotti family, who also own Total Control, paid about $3.5m for the stations, which was in line with price expectations at the time.
"It's difficult to pinpoint (pastoral demand) because there have been so few sales, but demand has certainly increased, commodity prices - particularly beef - are very strong and the increased interest in carbon farming has also had an impact,'' Mr Wilding said.
Oil and gas giant Woodside was an active buyer in the WA rural property market, Farm Weekly reported in August, buying farmland worth $7.585m since 2019, including a 3630ha property at Badgingarra for $3.6m to conduct carbon farming projects, in partnership with Greening Australia, to offset its carbon emissions and to achieve it aim to be net zero by 2050.
Nutrien Harcourts' Brad King said buyers from the mining and resources sector made up a small part of the WA rural market but growing public and government pressure to reduce offsets meant demand from the sector should continue.
"They do fill a hole in the market, particularly in some remote areas,'' Mr King said.
"I think demand will probably increase, but we are not sure where (the carbon farming sector) will land because its not quite black and white.''
New Norcia Farms, one of WA's most historic properties spanning 8000ha, went on the market in September, with Farm Weekly reporting the land would be worth about $35m-$40m.
By December it had been acquired by the Forrests' Harvest Road company to be integrated into the family's diversified agri-business.
The historic Springvale aggregation, in the Kimberley, which forms part of one of WA's biggest cattle operations Yeeda Pastoral Company, quietly went on the market last month, with price expectations of about $70m.
A shortlist of four potential buyers, from eight expressions of interest, were preparing to inspect the 604,000ha property, which is being sold with about 35,000 head of cattle.
Rural holdings were held tight in many areas, as evident in a rare sale in Esperance in April of the 1951ha Kimberley Downs at Dalyup, which was described as the most notable in the region for 12 months.
The property, sold through Nutrien Harourts WA sale representative Paul Thomason for a record price - reportedly $14m.
"Kimberley Downs sold within two days of hitting the market and was met with robust enquiry within that short timeframe,'' Mr Thomason said.
"Any farmland in that area with good rainfall and best industry practices has been achieving very strong prices.
"In the space of six months, the price of land in the area went up by about $1240/hectare which just shows you how fast the market has been moving.''
"We have way too many buyers and not enough land, so when a farm does come up for sale you have to be quick to respond,'' Mr Thomason said.
For the first time in about four years, a premium, large-scale offering hit the market in Marvel Loch/Southern Cross in July, when Ray White Rural WA director Hugh Ness listed for sale the 13,978ha Trevino.
The property was owned by a well-known local farming family who had farmed in the region for generations.
"We have evidence of land going up over the past 12 months by 12pc-20pc in other regions such as the Great Southern, but there hasn't been much recent sale in this area to compare it to,'' Mr Ness said at the time.
"What we can safely say is that what buyers paid a couple of years ago is not the current rate and I think that will be reflected here, because the figures paid in the past 12 months in may regions are as high as they've ever been.''
Looking forward, Mr Cheetham said it would take a significant correction - such as a really bad season or sharp interest rate hike - to knock the market from its growth trajectory.
"When looking forward and making land buying decisions, there is some caution given to price increases and availability of inputs into 2022 and potential for interest rate increases, however this has not stifled the underlying demand,'' he said.
"Buyer enquiry in volume continues to be greatest from local farmers looking to expand, with corporate buyers continuing to be very active and prepared to pay top dollar when the property in question meets their parameters."
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