Total land value dips 12%
The big properties are attracting buyers, says Colliers International. Photo: John Woudstra
THE total value of Australia's rural land has decreased for the first time in 20 years, but sales of large properties have begun to improve as foreign investment buoys local competition, according to a new report.
Specifically, transactions are increasing for big dry and irrigated farming country and large high-rainfall grazing holdings, according to Colliers International's 2012 rural and agribusiness research report.
"The key wording here is large scale," said Alex Thamm, Colliers' national director of rural and agribusiness valuation and advisory. "The traditional neighbour-to-neighbour market for smaller holdings is still subdued.''
The report, citing the Bureau of Statistics, said rural land was valued at $264.6 billion in June last year.
''For the first time since 1993, the value of rural land decreased, dropping 12 per cent on 2010,'' the report said.
Mr Thamm said rural property markets in general were more likely to go sideways for the next three to five years. Specific sub-markets may rebound more quickly when coming off a very low base, such as vineyards.
Tim Altschwager, director of rural and agribusiness at Colliers International, said prices in most sectors had bottomed out. Restructuring in the rural property sector, particularly in forestry and wine and vineyards, had created opportunities and encouraged activity. According to the report, more than $2 billion in equity commitments has been raised and another $2.5 billion is being raised for investment in agricultural land.
''Australian agricultural land is quickly moving to the top of investors' wish-list. It's about food security, portfolio diversification and high net returns'' Mr Altschwager said.
A new breed of investor was coming through. "It's not just offshore investors but high net-worth individuals are also in this space, and it's no longer just tax driven," he said.
Mr Thamm said the level of foreign ownership of agricultural land and food production in Australia still continued to concern many. A recent ABARES report found that 98.5 per cent of agricultural businesses were Australian-owned, as was 88.6 per cent of agricultural land.
Current foreign ownership of agricultural land, businesses and water entitlements was comparable to the levels of 1983-84.
But the data did not capture all foreign investment. ''Foreign investment has been increasing, and more evidently during the past three years, following the downturn,'' the report said.
''Most of the activity … has been for assets well below the $231 million threshold set by the Foreign Investment Review Board.''
Mr Thamm said foreign investment played a big role in agribusiness, but ''so do local interests".