Rural Property Pulse Winter

Rural Property Pulse Issue 27  |  Winter 2017

Contents Inside > Market positioned for sellers to act sooner rather than later > REGIONAL UPDATE > Challenging weather no impediment to horticulture sector optimism > Fortunes of wool types following divergent paths > Plenty of grass and strong schedules driving positive livestock market

Back > A closer look at sectors

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Market positioned for sellers to act sooner rather than later Across the country, the rural property market is gradually climbing, with both the volume and value of sales edging up.

spectacular. Owners of orchards and vineyards are gaining the benefits of the strategic long-term approach to developing international markets for value-added produce that has been applied in their sectors over a sustained period.

Sheep and beef property is in demand throughout most regions. Meat company schedules and export projections for sheep and beef farmers are sound, while excellent autumn growing conditions throughout most of the country have provided a surfeit of pasture that farmers look set to capitalise on.

Activity in the autumn market built towards a vibrant season’s end. In some parts of the country, stocks of farms for sale were exhausted. Large farming entities and corporates are starting to emerge again, playing a part in increased market activity. With unsatisfied buyers still motivated and looking for suitable property, signs are encouraging for a positive spring. However, value is top of mind for most prospective purchasers.

Reviewing sales in various regions, the market in Otago and Southland is gradually building.

During the autumn, finishing units throughout Otago have been in demand, while Southland dairy farms are selling again at solid prices. In both regions, neighbours are active, buying adjoining properties or farms nearby.

Meanwhile, in the North Island, the market is performing strongly in Northland, Waikato and the Bay of Plenty. In the latter region, demand for premium horticulture land has been ascending for some time, with kiwifruit orchards selling at noteworthy values. Further south, viticulture property is also in demand. Optimism around property in these sectors is underwritten by export performances that range from steady to

Since the international dairy cycle started to swing up again, with a steady to positive pay-out, optimism has also returned to the market for dairy property. While this is not a dramatic headline-grabbing leap forward, farmer confidence is edging back compared to the ‘sit tight’ attitude that prevailed before the global dairy trade auction started to rise.

While many dairy farmers are thinking about buying land again, and some prestigious listings will come to the market in late winter and early spring, a big focus within the sector remains on price. Although market signals are encouraging, returns and affordability continue to be the critical factors in any purchase decision. Funding availability will be an important component for most transactions as we move into spring. A buyer’s equity and the demonstrable cashflow from a property will have to stack up to persuade financiers to underwrite most purchases.

Despite the generally positive market indicators, and quantified demand from motivated potential purchasers, listings of rural property are in short supply. Even farms that had been on the market for an extended period found willing buyers during the autumn. Unsatisfied purchasers, with financial resources, are still out there looking for rural property, with relatively little to choose from.

From across our nationwide network, we know that a significant number of farmers plan to list property for sale. Most are likely to withhold from going to the market until the spring.

While that is understandable in some respects, it may not be well advised. Farmers may be better off going to the market now, with less competition and more buyers to present to.

Although spring is traditionally a good time to sell, with farms looking their best, those who wait that long are going to face increased competitive pressure from other vendors.

They will also encounter prospective buyers who have access to more choice, and who will therefore place greater focus on value.

Consistently, from regions throughout the country, and across most primary production sectors, there is a renewed emphasis on quality.

Purchasers demand proof that any property they buy will pay its way. They will need to establish a business proposition before taking on a farm, and any documentation provided by the property’s previous owner will need to support that.

In short, steady demand prevails for quality rural property, although listings to meet that demand are insufficient. Anyone thinking about marketing property should therefore act sooner rather than later, initially by taking independent professional advice.

That should include contacting PGG Wrightson Real Estate’s nationwide team of rural property specialists. We look forward to your call.

Peter Newbold General Manager PGG Wrightson Real Estate Limited

Rural Property Pulse is published quarterly by PGG Wrightson Real Estate Ltd, PO Box 292, Christchurch 8140.

The information provided in this publication is intended to provide general information only. This information is not intended to constitute expert or professional advice and should not be relied upon as such. Specialist specific advice should be sought for your particular circumstances.

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Regional Update Northland Rural property activity in Northland was strong during the autumn, especially in the Kaipara area. Several sales of smaller farms, priced between $1.5 and $2 million, were concluded.

On a larger scale, a 430 hectare Kerikeri dairy farm also sold notably in March for $8.4 million. With the sector turning around, some purchasers are first-time dairy farm owners, while others are consolidating or reconfiguring their holdings, focusing on one area, rather than having farms spread wide. Prices have ranged from $9,000 to $28,000 per hectare.

Elsewhere, with meat schedules favourable and plenty of autumn grass, a few dairy farms have sold to intensively farm beef. Heading into winter, the market is short of rural listings, particularly between Whangarei and Rodney.

With plenty of unsatisfied demand, any Northland farms listed for winter or spring sale should attract enthusiastic scrutiny.

Waikato With various of the region’s rural localities under pressure from urban growth, one of the features of the recent Waikato market has been increased diversity. Some farmers have purchased property with a view to alternative land use. Smaller farms are particularly

attracting this interest. One 50 hectare dairy support property on the outskirts of Hamilton was purchased recently for conversion to arable.

Around Matamata, land is coming out of dairy into onions and potatoes. Following further land use change, Waikato is also growing more kiwifruit than has historically been the case.

Sheep and beef properties did not feature heavily in the region’s autumn market, although the value of those that have sold held steady.

Meanwhile, dairy properties in the region’s more desirable localities continue to sell well on steadily appreciating values and in greater volume than was recorded in autumn 2016.

Bay of Plenty, Central Plateau and South Waikato Bay of Plenty kiwifruit orchard sales generally catch the eye. This autumn transactions were between $750,000 and $800,000 per canopy hectare for gold G3 land and $350,000 to $400,000 for Haywards green kiwifruit orchards.

Dairy property sold well, including a 44 hectare Waihi farm that changed hands for $3.4 million (approaching $80,000 per hectare), purchased by a neighbour at auction. With positive indications around the dairy payout, Rotorua’s rural property market looks set for increased activity in spring. Rotorua autumn sales

ranged from $25,000 to $45,000 per hectare, depending on the quality and location of the farm. Rotorua drystock blocks are in demand, whether for beef finishing or dairy run-off, and the most desirable finishing farms in the region have sold at up to $30,000 per hectare, although values between $15,000 and $20,000 per hectare are more commonplace.

Whanganui and Taranaki Whanganui and Taranaki’s autumn rural property market was less active than in recent years.

While the dry summer cautioned many farmers against offering land for sale, the bulk of those farms that were listed sold well, particularly at the upper end of the market. Improving sheep and beef incomes drove farm sales, with Whanganui finishing and grazing blocks changing hands between $4,400 and $7,000 per hectare. A small handful of farms sold to reverse dairy conversions and property outside the region’s premier localities proved difficult to sell. Some of these may return to the market in the spring. Taranaki dairy farms sold within a wide range of prices from $27,000 to $60,000 per hectare, depending on location and the quality of improvements.

Well-located properties with good production history and a high standard of improvements continue to attract significant demand.

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Regional Update Manawatu and Wairarapa Although demand for all types of rural property remains strong in Manawatu and Wairarapa, few farms were listed for sale in the region during autumn. Sales in the region indicate year-on-year capital gain of up to five per cent.

A notable Manawatu sale in April was a 659 hectare Halcombe finishing property that sold by tender for $7.56 million (or over $11,400 per hectare). Wairarapa dairy farms that sold during the period ranged in price from $22,000 to $30,000 per hectare. Meanwhile, a marked increase in income from traditional sheep and beef breeding properties led to sale prices for Wairarapa farms in that category firming between $4,000 and $4,800 per hectare.

With listings scarce and unlikely to increase, a continuation of the prevailing sellers’ market is indicated through winter and into spring.

Hawke’s Bay A limited number of Hawke’s Bay farms were offered to the market in autumn. These sold well. Although market activity is likely to slow through winter, as it traditionally does, prospective vendors are considering marketing property in spring and are preparing accordingly, well in advance. Autumn was late this year. However, when it did arrive, it brought plenty of grass and was accompanied by excellent cattle prices and an overall increase in-store sheep and cattle prices, which is encouraging for farmers and lifted the rural property market. Farm values in the region remain strong, with listings selling quickly at good levels. Several larger Hawke’s Bay properties sold at prices between $7,000 and $10,000 per hectare. While demand for farms is likely to drop away heading into winter, with few available for sale, this should change again in spring.

Nelson/Marlborough Favourable autumn grass kept the Nelson/ Marlborough rural property market optimistic.

Horticulture, meanwhile, is undergoing major growth in the region, with new plantings of apples, hops and grapes. Land values are increasing and, with blocks difficult to come by, competition to secure those that are offered to the market is fierce. Community irrigation providing water for the Waimea Plains would add further impetus. No significant postharvest sales of Marlborough grape blocks were concluded in autumn. While interest from buyers apparently remains strong, growers took time to assess their returns and were not ready to test the property market.

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Several Rai Valley dairy farms have changed hands recently at prices ranging from $28,000 to $30,000 per hectare. These values reflect the upturn in the payout projection and the ongoing appetite to enter the dairy industry.

Canterbury After a busy final quarter of 2016, the rest of summer and early autumn were less active.

Plenty of late March and April rain freshened up Canterbury, persuading some farmers to offer smaller blocks for sale. Several properties in the Central Plains Water area were listed towards the end of autumn. Reliable irrigation should add a premium to these properties, although it is too soon to say what value the market will place on that. A fully irrigated 222 hectare farm with dependable water consents and rich soils selling at Cust, Waimakariri, will receive close market attention. With the beef schedule positive, finishing farms are well sought after, while the region has had no notable dairy farm sales for some time. This trend is likely to continue through winter then market activity should lift again in spring.

West Coast Optimism around dairy prospects has yet to reach the West Coast as local cooperative, Westland Milk Products, has so far been unable to reverse its low payout forecast. Nevertheless, there has been recent interest in 50 to 60 hectare run-off properties around Whataroa, Franz Josef and Hokitika, as local farmers consider extending milking platforms. While sales did not transpire during autumn, prices in the range of $13,000 to $14,000 per hectare were indicated. Climatically, one of the region’s best autumns followed one of the worst summers, leaving plenty of cover on West Coast paddocks and cows in good condition.

Most farmers are sitting tight, awaiting good news from their local producer, rather than offering property for sale. Any positive signals through winter could result in an upturn in the spring rural property market. Significant activity before that is unlikely.

Mid and South Canterbury While autumn sales in Mid and South Canterbury were lower in volume than recent years, sales values returned to the record levels last seen just before the 2008 global financial crisis. An Ashburton dairy farm, for example, sold in April for $52,677 per hectare. Sellers buying their next farm characterised market activity, with few cash buyers and finance difficult to obtain. For sale by deadline private

treaty in early June, 913 hectare Hakataramea Downs traditionally winters up to 7,500 stock units of deer, cattle and sheep, and includes 250 hectares under gravity-fed irrigation. With the possibility it will attract a large-scale or corporate buyer, its sale should provide a useful market indicator. Although the number of currently active buyers is limited, there is scope for more Mid and South Canterbury farms to be offered for sale in spring.

Otago and Central Otago A relatively mild autumn was encouraging for Otago farmers, with abundant grass and reassuring prospects going into winter. With commodity prices also rising, several sheep and beef properties were transacted in the region in recent months, including a 176 hectare Tarras property that sold in April for $4.85 million. Other autumn Otago sheep and beef farm sales ranged between $3 million and $5 million, equating to approximately $1,000 per stock unit. Buyers for farms carrying greater than 10,000 stock units are proving more difficult to find and activity in the region’s dairy property sector has been relatively quiet. Coastal Otago forestry sales have been numerous and this market continues to prosper, with excellent results. Listings of all Otago rural property types are in short supply and any farm offered for spring sale is likely to be favourably received by an eager market.

Southland Southland’s autumn rural property market showed a significant lift, with the total value of transactions up by around 50 per cent on autumn 2016. Dairy farms are selling again.

An 800 hectare Mossburn property, milking around 2,000 cows, was purchased in April by a significant corporate farmer valued around the mid $20,000s per hectare. A series of Gore properties from the Solid Energy portfolio sold through the tender process in March. Values for these sheep and beef farms ranged from $14,000 to $27,000 per hectare for variable sized blocks. Through winter, few Southland dairy farm sales are likely. With recent dairy auction increases, initially at least, the number of dairy farms for sale is likely to reduce as owners hold back until the spring before presenting their properties to a more confident spring market. Those purchasers previously looking for bargains in the region may have missed their chance.

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Challenging weather no impediment to horticulture sector optimism While climatic conditions provided some challenges for horticulturists during the autumn, eager export markets underpin a groundswell of optimism in the sector.

For most crops, a cold, wet spring, including hail in some regions, meant it was never going to be an ideal growing season. Then, during late summer and autumn, heavy rainfall through the North Island, and the top and east coast of the South Island, slowed fruit maturity, particularly delaying apple crops in Hawke’s Bay and Nelson, as well as creating challenging conditions to harvest grapes. Rain also presented issues for vegetable growers, who struggled to maximise yield and quality from their crops this year, particularly in Hawke’s Bay and Auckland.

Looking to the future, adverse weather has made planting out this year’s strawberry crop difficult, and it remains to be seen whether the quantity of land planted in strawberries will be the same this year as it was last.

Despite those challenges, the horticulture industry remains in a strong position, as indicated by record and still rising land prices for the likes of kiwifruit and pipfruit orchards and viticulture

property. Most growers and corporates involved in horticulture are optimistic about the future.

Many are investing in development projects to capitalise on the enthusiasm that international markets have for New Zealand produce.

In most parts of the sector, varieties are crucial.

Those apple growers, for example, who have had the foresight and resources to diversify out of traditional varieties, moving into growing proven new strains, are achieving profitability comfortably in excess of those who have not adapted. Growing the new apple varieties to a high standard of quality and sending them into appropriate markets, particularly Asia, is financially rewarding. Those growing the new varieties are also spending more to protect their fruit from hail, which essentially is an investment in ensuring the quality of their produce and therefore their higher returns.

Kiwifruit provides a similar example of the dynamic opportunities for development in

the sector. Growers are anxious to invest in the new Zespri licences to grow the gold G3 variety. In general, where growers have obtained these licences, which were heavily over-subscribed, they are cutting over from green kiwifruit and converting orchards to gold, rather than undertaking new planting.

While this represents a significant investment in the stock, the licence and the land, for most growers, it is one that will deliver a reasonably short payback period.

It is a risk that many in the sector are prepared to take across various different crops and one that, in most instances, should see bold decisions generously rewarded.

This report was prepared in consultation with PGG Wrightson’s Fruitfed Supplies, a leading horticultural service and supply business servicing New Zealand’s major horticultural regions.

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Fortunes of wool types following divergent paths Fortunes for wool growers remain polarised. Although fine wool is internationally well sought after and delivering excellent returns to New Zealand farmers, crossbred wool prices continue to languish, with little to indicate that prospects will improve any time soon.

New Zealand crossbred wool growers depend heavily on Chinese manufacturers, who in recent years have typically purchased around 50 per cent of our wool clip. Of late, that has dropped back to just 32 per cent of New Zealand’s output, impacting significantly on prices. Although demand from China for New Zealand’s strong wools lifted 30 points in March, briefly boosting prices, this was a momentary increase only and the previous reduced levels have since resumed.

Slightly more optimism surrounds those crossbred types that generally go into knitwear, such as the longer 50 to 100 millimetre shears and lambswool of about 30 microns and finer, which lifted slightly in April and May. Otherwise, demand is low.

Complicating the picture for strong wools, stocks throughout the country of most types

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are high. Farmers, scourers, agents and exporters are all holding wool back from the market, both from last season and from this. With the lack of demand, those backlog stocks are building, meaning fresh demand will take time to translate into increased returns.

During periods where demand is low, farmers and contractors need to put in extra effort to ensure wool is well presented. Anything showing signs of seed, colour or staining will be discounted.

Lack of due care can also lead to problems with overweight bales. Any bale exceeding 200 kilograms needs to be manually altered before it can enter the supply chain. With around 13 per cent of bales consigned from farms across the industry overweight, that is a high degree

of inefficiency that could be easily remedied in the wool shed.

For fine wool, the story is much more positive and appears sustainable.

Following technology advances enabling fine wools to be used in leisure wear products, outdoor apparel and cyclewear, demand for New Zealand fine wool is strong and steady.

As consumers become more aware of the benefits of natural versus man-made fibre when assessed for comfort, durability and environmental considerations, future demand for New Zealand’s fine wool clip appears assured.

This report was prepared in consultation with PGG Wrightson’s wool team

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Plenty of grass and strong schedules driving positive livestock market Good autumn grass growth and positive markets led to vibrant trade in livestock throughout autumn.

For dairy farmers, regular auctions throughout April and May helped provide solid market indicators on which to trade cows, particularly in the North Island.

Good-quality stock sold at firm values approaching $2,000 per head; medium-value stock held steady; and poorer-end stock decreased in value. Across the board, willing sellers came together with willing buyers, agreeing on price and establishing reliable market levels.

North Island prices for rising two-year-old heifers went through a similar price resetting process, finding a range from $1,000 to $1,700.

Outside enquiry from the South Island, where prices remain higher than they are on the North Island market, was a feature.

With live export companies offering more generous prices than the domestic market, values for rising one-year-old heifers lifted substantially to levels between $1,100 and $1,150 per head. Payout forecasts for the 2017/18 season mean these prices also represent a good trading option for farmers ready to bring heifers through for next season.

As confidence in the sector returns, farmers are assessing how best to milk more cows.

Through the downturn, many operated with reduced herd sizes, which they are now ready to rebuild. While many will do that by natural increase, others are coming to the market, where the auction system has the capacity to satisfy all buyers.

This autumn has been notable for the lack of cull or boner cows coming out of herds. With lower herd numbers and such good autumn conditions, many farmers are milking longer than they expected, bringing in increased revenue.

Notably, buyers are going across districts, trading outside their home localities. This trend has developed across the course of the autumn where, earlier in the season, farmers were only looking in their own backyards.

For sheep and beef categories, the picture is also rosy.

Weaner cattle are selling at record values, fetching $150 to $200 per head more than prices during the corresponding period last year.

With abundant autumn grass growth, strong demand out of Europe, and China back in the market, prices for sheep are also on an upward trajectory. Both the lamb schedule and the store prices schedule rose considerably during the autumn. Values of $6 per kilogram for both beef and lamb are encouraging for farmers.

Underlying factors include increasing demand out of Asia and the United States, where New Zealand’s market access has improved.

While Brexit is also working in favour of New Zealand at present, as British supermarkets are finding it difficult to put lamb in their cabinets, this might only provide a temporary benefit.

A scenario of plenty is playing out for sheep and beef farmers. There may be insufficient livestock across New Zealand to consume all the dry matter that the favourable autumn weather has produced. Demand for animals to capitalise on this outstrips supply and it is rare for so many districts across the country to have so much grass at the same time. It is a positive ‘problem’ for farmers to have.

sought after being a North Canterbury bull that changed hands for $40,000. Hereford bulls at the sale averaged $14,084.

Top price paid among the 21 Angus bulls sold was $34,000. Angus bulls averaged $12,476 at the sale; Simmentals $5,260; and Gelbviehs $5,000, while the top priced Charolais changed hands for $10,000.

Farmers are now prepared to pay $500 to $1,500 more for quality bulls than last year’s sales values. Genetic innovation in the commercial area is focused on performance improvement, particularly around fertility and quality, with better genotypes and phenotypes sought after. Although bulls capable of lifting the performance of a herd are at a premium, breeders are making big improvements all the time, ensuring better weaners on the ground. Bulls able to produce depth, width and durability are in demand, with farmers prepared to invest in animals that will ensure these characteristics in their progeny.

This report was prepared in consultation with PGG Wrightson’s livestock team

One impediment to the livestock market is the upper South Island’s damaged freight and transport network, still under reconstruction following the November 2016 earthquake.

Stock that might previously have been shipped from south to north are now more likely to stay in the South Island after logistics became more much problematic following the quake.

With the abundance of autumn grass, stock is likely to largely maintain current values throughout winter, with some upside possible in sheep, although cattle prices may ease a fraction.

This year’s Beef Expo in Feilding, in May, indicated the confidence of farmers, with 110 good-quality bulls from a range of breeds under the hammer. Hereford breeders came to the fore, met by strong buyer support. Of 22 Hereford bulls offered for sale, 20 sold, the most

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A closer look...

Sheep and Beef Sheep and beef farms sold in low numbers during autumn, although prices remain static.

A similar situation prevailed this time last year.

With returns generally positive, particularly for beef, farmers are not inclined to sell and listings are light. Several less well-located properties that had been on the market for an extended period did finally change hands recently, leaving few remaining listings. New legislation on clean rivers, particularly relating to steep contour land used to graze cattle, adds a level of complication for many property transactions. Consequently, the sales process for farms in this category has extended and is taking longer to complete. However, in most regions, demand for sheep and beef property remains unsatisfied. Any new listings that come forth leading up to or during spring can therefore anticipate an enthusiastic reception from the market.

North Island Dairy Nearly twice as many North Island dairy properties sold in the first four months of 2017 as in the same period of last year. With confidence returning to the sector and the payout forecast stable, vendors have been happy to accept that prices will not rise significantly any time soon. Demand at the market’s upper end means values are gradually rising and properties are selling readily.

Prices of around $70,000 per hectare are the current norm for these farms. One 107 hectare Clevedon dairy farm sold in May at $11.1 million (or over $110,000 per hectare). Overall, however, average sale prices are unchanged from last year, with less favourably located properties receiving little attention. Sales activity is likely to be minimal throughout winter, although spring should breathe new life into the market, as it customarily does most years.

South Island Dairy Canterbury dairy farms sold between $52,000 and $57,000 per hectare during autumn, as the gradual recovery of the sector’s prospects, accompanied by a profit-yielding payout, became more entrenched. Properties on surface-water-based community irrigation schemes are gaining more attention than those irrigating from groundwater, as environmental issues and the added reliability of scheme water is establishing a premium for those farms. Twice as many Southland dairy farm sales were transacted in the 2017 autumn as in the previous year, with values also gradually rising. One large Mossburn property changed

hands, bringing a significant corporate farming business to Southland for the first time. Uncertainty around the regional council’s land and water plans is still a factor affecting dairy property sales in both Canterbury and Southland. That issue aside, the spring market for South Island dairy property is likely to be busy.

Viticulture Although the challenging 2017 vintage will have a short-term impact on the local economy in viticulture regions, all signs indicate continued strength in the sector’s property market. Most growers have a long-term view and can ride out a poor season.

Ongoing growth remains positive, as cash buyers from outside Marlborough enquire after developed vineyards and bare land suitable for grapes. Larger companies continue to position themselves for further development, for which land is in great demand. Benchmark prices sit at $250,000 per canopy hectare in premium areas. Tanks amounting to 20 per cent of Marlborough’s total storage capacity were reported damaged in November’s earthquake, however these are believed to have been restored in time for the harvest. While some Hawkes’ Bay vineyards did sell to horticulturists for conversion to pipfruit last year, no such sales occurred throughout autumn.

Kiwifruit Prices for kiwifruit orchards growing the G3 gold variety continue to rise. A 10.63 canopy hectare orchard, at relatively high altitude, sold for $734,000 per canopy hectare in late April, a $5 million profit on the previous time this orchard changed hands, which was in late 2014. A few days later, a 5.83 canopy hectare orchard sold for $850,000 per canopy hectare, the first time that benchmark has been reached. Two large green kiwifruit orchards also sold in recent months, one for $450,000 per canopy hectare and the other for $410,000 per canopy hectare. Of over 900 recent applications for Zespri licences to grow gold kiwifruit, 260 were granted. Two adverse weather events hitting the Bay of Plenty in mid-autumn could have a significant impact on the harvest, though this will not be fully realised until all this season’s crop is picked.

Pipfruit and Stonefruit Few Hawke’s Bay pipfruit or stonefruit orchards sold in autumn, when sales during the picking season are unusual anyway. When properties did come to the market, a shortage of listings created strong prices in the sector. In the latter category were the sale of a 6.5 hectare

Havelock North apple orchard for $1.65 million in March; a $1.35 million sale of a 10 hectare Haumoana orchard in April; and the $1.76 million sale of a 12 hectare property in the same district shortly after. Existing growers and passive investors who already own orchards were the purchasers. Several pipfruit listings were offered for sale late in the autumn, attracting positive interest. Demand for smaller properties is also strong, with these orchards providing the combination of a lifestyle component alongside passive investment.

They are generally selling to cash buyers.

Cropping Cropping farmers have not had an ideal season, with inclement weather affecting the harvest, impacting severely in some cases.

Mid Canterbury arable properties, in New Zealand’s premier cropping country, only rarely come to the market and typically only change hands within a limited group of existing owners. Those farms sitting below the 160 metre contour line, with soils suited to onions, carrots, potatoes and red clover, and capable of growing two crops per annum, are most coveted, attracting a premium.

This season, four of these properties, ranging from 227 hectares to more than 450 hectares, changed hands, valued between $47,000 and $50,000 per hectare, holding firm or appreciating slightly on recent benchmark values. With the introduction of restraints on spraying milling wheat that is grown on freedraining soils, some farms are set to become more challenging to sell.

Forestry Demand for export quality and domestic timber is high. For South Otago land with forests planted since 1990, therefore ready for harvest within the next five years, transactions of approximately $25,000 per hectare, including land and trees, are taking place.

Purchasers anticipate netting around $30,000 per hectare once they have harvested the timber. Undeveloped tree country is selling for between $3,000 and $4,000 per hectare. This is not easy to come by although, as technology and equipment for clearing forestry land has improved, previously undesirable blocks have attracted greater interest, creating new options for owners of land that otherwise had minimal value. Demand for forestry land, from undeveloped to harvest-ready and all stages in-between, exceeds supply. With the domestic building boom unlikely to end and Asian countries still eager for New Zealand logs, that situation will probably prevail.

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