Rural property market update: ARABLE, August 2018.
On the back on steadily improving grain and feed prices throughout 2018, the demand for arable and mixed cropping land in Mid and Central Canterbury with quality attributes such as reliable irrigation water and versatile soils is still robust.
Despite the Canterbury dairy farm market being a little more subdued over the past few months, the arable and mixed cropping land market has still been quite active. This demand has resulted in some strong sale prices being achieved, as indicated by our analysis.
Typically, arable and mixed cropping properties are smaller in scale and have far less capital tied up in infrastructure compared to a dairy farm. The weight of money overall is generally less making these blocks relatively more affordable.
Cropping farmers can also operate blocks further afield which do not need to be immediately adjoining their home operation. This widens the buyer pool and increases competition, particularly for small to medium sized parcels of land.
There is also competing demand for some of these versatile arable and mixed cropping blocks for alternate uses, such as dairy support or dairy conversion.
Concerns around issues such as Mycoplasma bovis is only creating further demand for smaller support blocks as many dairy farmers look to mitigate risk by trying to become self-contained.
Beef and lamb prices have also been strong further increasing demand for versatile land suitable for arable and lamb trading.
It is no surprise that purchasers are still quite discerning in the attributes they look for in arable and mixed cropping blocks and this is evident in the recent key Mid and Central Canterbury arable sales map.
There is a well-defined relationship between key block attributes and the prices achieved indicating buyers will pay the highest prices for properties with quality soils, together with a relatively low-cost, reliable irrigation water resource providing enough water.
Other factors such as irrigation type (pivot, rotorainer, gun etc) or shape of the block and proximity to main centres also drive demand.
With grain and feed prices currently above long-term averages and Fonterra providing greater guidance on the use of palm kernel (increasing the demand for grains), together with macroeconomic factors such as a declining NZ dollar and continued low interest rates, this should ensure that demand continues for well-located arable and mixed cropping properties for the foreseeable future.
For more information please contact
+64 27 631 1077 | Ryan.Bratty@colliers.com
+64 21 199 4599 | Tim.Banks@colliers.com
+64 21 991 348 | Greg.Petersen@colliers.com