A buoyant pastoral sector has led to renewed interest in land acquisition, according to Colliers’ sheep and beef property experts.
Nationally, 963 livestock properties traded hands in the 12 months to June 2021, according to REINZ.
This saw the number of sales return to the 10-year average of 976 per year, from just 713 in the 12 months prior.
The REINZ data also shows an increase in values with the median sales price increasing from $17,450 per hectare to $20,725 per hectare in the past 12 months, up from the ten-year average of $17,517 per hectare.
Richard O’Sullivan, Director at Colliers Canterbury who specialises in pastoral sales says the spring season following the Covid-19 lockdown in 2020 marked the beginning of a rebound in the sheep and beef sector.
“In the 12 months leading up to the Covid outbreak in New Zealand there were limited sales of pastoral properties with a low number of listings and varying bank support to allow transactions to occur,” O’Sullivan says.
“Post Covid there’s renewed optimism in the sector with general confidence in New Zealand’s economy and our status as a safe haven leading to more farms coming to market, and higher values being obtained.
“In the South Island, one of the key drivers of increased demand for pastoral land is positivity in the dairy sector, which has urged businesses to look for additional support land in the 100 hectare to 400 hectare range.
“We are also finding that many sheep and beef farmers are looking to expand by purchasing local properties or divesting their assets and acquiring larger land holdings in other regions.
“For example, there’s been a noticeable increase in buyers looking for yield-based purchases in the South Island after selling land that has alternative uses, such as forestry or horticulture, for a premium in the North Island.
“Overall, the clearance rate for pastoral property has improved significantly in the past 12 months with vendor and purchaser price expectations tending to align.
“The North Canterbury market has been particularly active with ten sheep and beef properties changing hands in the $1.9 million to $5.8 million range, and two larger units selling for more than $8 million in the past few months.
“Glencairn Station, a high-country sheep and beef breeding and store stock property between Omarama and Twizel sold at deadline for $7.7 million after receiving more than 40 enquiries.”
O’Sullivan says increased sales activity has also injected much-needed liquidity into the market.
“We anticipate sales activity for dryland and irrigated properties in the 100 hectare to 300 hectare range to continue to increase in the coming season as capital trickles down into the pastoral sector from dairy farm sale proceeds, farm business expansion, and North Island buyers looking for scale and yield.”
Jason Waterman, Pahiatua-based Rural Sales Specialist, says interest in pastoral property is solid across the Tararua and Wairarapa region.
“We have seen strong interest in all classes of land, with a notable lift in enquiry from outside the local area,” Waterman says.
“Those in dryer locations such as the Hawke’s Bay and Wairarapa are looking to the Tararua district where rainfall is higher, especially in the summertime.
“With the industry showing growth in the past 12 months, local farmers are also seizing the opportunity to expand on the back of good returns.
“Hill country properties in the Tararua region are proving popular, resulting in sale price lifts of around $2,000 to $4,000 per hectare in the past two years.
“One example is Gorge End, a 300 hectare property just east of Pahiatua that would have sold for around $5,500-$6,000 per hectare two years ago, but recently sold for upwards of $9,000 per hectare.”
Waterman says first-time buyers are bearing the brunt of increased demand.
“Like all property markets, it’s getting tougher for first farm buyers to purchase their first property.
“With leases hard to come by, progressive young farmers are looking to equity partnership models to get their foot in the door.
“At the other end, retiring farmers are facing tough decisions over where to invest funds with interest rates at an all-time low.
“Structuring of deals, such as vendor financing being left in the property for incoming purchasers could be a win-win situation for both buyer and seller, and something we see becoming more popular in the short to medium term.”
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