Higher milk prices have stirred the Waikato rural property market this summer, with the region’s prime dairy farms definitely back in demand.
Several high-performing properties in the Matamata and Morrinsville areas have sold at prices at or above $70,000 per hectare. These include a 127.4 ha farm on the edge of the Matamata township which reached $9.65 million on the back of its production record, high-quality infrastructure and location. In the four months to 30 January 2017, Waikato saw 40 dairy units change hands – a jump in sales compared with the previous summer. However, the market value of second-tier dairies has yet to move significantly and the medium price across all sales was a modest $50,600 per ha.
February has seen significant progress on the Property Brokers-managed sale of one of New Zealand’s most high-tech dairies, near Hamilton. The 72.7 ha Puketaha property has a robotic milking plant and a self-feeding barn for the cows. There was much buyer inquiry before it went under offer to a Waikato-based entity which intends to subdivide the property but retain its dairy operation.
As autumn approaches, the market in this region has taken on a solid feel with more listings and a high level of knowledge among buyers aware of Waikato’s diverse potential for dairy support, cropping and beef finishing as well as milking. There is a trend to lower stocking rates along with increased reliance on grass and locally-grown feed crops. In South Waikato, conversion from forestry to pasture has virtually come to a halt given pressure on water supply for irrigation and farmers’ re-forecasting of returns on dairying over the years ahead. The rural property market is also taking stock of likely costs associated with Environment Waikato’s nutrient management proposals for improved ground and river water quality. That said, Waikato will continue to be underpinned by the region’s status in New Zealand agriculture, and interest from Auckland or internationally-based investors who seek farming returns and/or lifestyle options.
Further south, the King Country market remains subdued, due in part to prospective vendors awaiting further recovery in farm values nationwide. The King Country is having an excellent growing season – without the dry that has afflicted much of Waikato – and this has also induced current owners to continue farming. Iconic Oio Farms near National Park is on the market and continues to attract strong interest. The 1460 ha beef breeding and finishing property also includes 14km of Whakapapa River frontage with unique recreational and tourism opportunities.
Manawatu, Wanganui & Rangitikei
Growing conditions have been excellent in Manawatu this summer, adding to the confidence that higher milk prices have given the region’s producers. While only one dairy farm has been sold over the four months to 31 January, new listings and buyer inquiry are both now on the rise.
Productivity on Manawatu’s best dairy farms can equal that on properties in Taranaki or Waikato although the former’s land values have traditionally been lower. The differential is expected to close as New Zealand dairying moves into its next phase.
The markets for Manawatu dry stock and arable properties have also been quiet over the summer as prospective vendors weigh all their options. The latest four-month period has seen 12 finishing farms sold with a median price of $25,300 per hectare, little changed from the previous year. Arable property sales have numbered just four.
Listings are, however, picking up across the market. Notable among properties newly listed is Frecklington, a self-contained 252 ha dairy farm in the Ohakea area. This property is significant for its scale, excellent development and proven productivity. On the market also is Tahuna, a 395 ha property in two blocks with high potential across a range of farming options due to its extensive centre pivot irrigation and sandy soils.
Property owners are tending to look more widely at their production alternatives in Manawatu, most notably goats milk and manuka honey. In the Opiki and Sanson areas, five cropping farms have been converted in full or in part to goat milking in recent months. It is further demonstration of the region’s potential for diverse land use.
In the Rangitikei-Wanganui region, market activity has been driven partly by diversification into manuka honey production, with keen buyer interest in any suitable lifestyle blocks or grazing land. There have been particularly sizeable sales (blocks of 144 ha and 77 ha) in the Kai Iwi area over the summer, and many smaller sales as well.
Interest is coming in from large-scale honey producers in the Bay of Plenty and elsewhere, with beehives moved between the regions in an annual cycle. This season has also seen the de-commissioning of a large dairy unit in the Mangahoe area and sale of its pasture for conversion to arable farming.
For more information, contact Blair Cottrill 027 354 5419 or Richard White 027 442 6171
The Hawkes Bay has had a very dry summer but its fundamental strengths in farming and horticulture remain clear to investors – and an increasing number of these are being attracted from outside the region.
There have been some excellent sales of highly-productive, and distinctly-Hawkes Bay properties so far this season. These include ‘The Steyning’, a prominent deer breeding and finishing farm in the central, Tikokino district. This 317 ha property, known also for its conservation developments, has been acquired for an undisclosed sum by a family concern which also has large-scale deer operations in the central North Island. Further south Waikareao farms, a notable 1136 ha finishing property, has been bought by a Northland-based buyer for a price of $7 million.
Overall, market activity on dry stock and dairying properties has been relatively subdued as buyers and sellers take time over their decision making. In the four months ended 30 January 2017, only eight finishing farms were sold, at a modest median price of $9,000 per ha. In dairying, there was one sale.
Horticulture is booming New Zealand-wide and this has helped spur demand for Hawkes Bay horticultural properties. The latest four-month period saw 10 such sales with the median price for these up to $106,000 per ha. Sales have included the $40.2 million purchase of 60 ha of highly-productive kiwifruit orchards at Fernhill near Hastings. The buyer is an iwi-based business with extensive kiwifruit production interests also in the Bay of Plenty.
As Hawkes Bay heads towards autumn, new listings are on the rise. These include Hirawai, a long-established sheep and cattle breeding and finishing property near Dannevirke. Hirawai is 603 ha of mainly alluvial flats or rolling hills with diverse livestock farming and cropping options. (see listing on page 50 and editorial on page 44).
Also, back on the market is Addavale, a 246.7 ha property near Waipawa with soils, contour and water supply that enable an exceptionally versatile farming operation. It has been used in recent years for extensive vegetable growing and green feed crops but could be suited to a wide range of high-value enterprises.
Property owners and prospective buyers await the outcome of current legal challenges to the proposed Ruataniwha Water Storage Scheme, which would control water flows on the Makaroro River and enable new irrigation on more than 25,000 ha in Central Hawkes Bay. Proponents say the scheme would support an array of productive land uses to boost the regional economy. The Supreme Court will rule on an appeal against a lower court decision that prevents one key aspect of the scheme proceeding on conservation grounds.
Tararua rural properties continue to gain recognition for their favourable location and climate – and for their value.
This summer has seen solid buyer interest in livestock and dairy farms although prices remain subdued in line with the mixed New Zealand-wide fortunes of agriculture. Over the four months ended 31 January 2017, the region saw six livestock finishing farm sales compared with just two in the corresponding period of 2015-16. The latest sales include a 1000 ha block in the region’s east hill-country area of Pongaroa, priced at $3,600 per ha, and a 417 ha farm near Dannevirke which sold for $8,900 per ha.
Tararua has long had a solid base of dairying as recognised by Fonterra in its 2015 expansion of the Pahiatua milk processing plant. It invested $235 million in a third drier for the plant. Two of the region’s dairy properties sold in the latest four-month period at a median price of $22,800 per ha, which was significantly ahead of 2015-16 values.
The region benefits from higher rainfall than the Wairarapa and the Hawkes Bay, and from rail and road links to two ports and processing facilities. Traditionally, land values have been lower than the neighbouring regions.
Property listings are gradually increasing and this autumn will bring a good range of farms to the market. They include a very efficient and well-developed 117 ha dairy unit near Eketahuna. This farm has a dairy shed, effluent system and wintering barn all less than 10 years’ old, and an additional 26 ha of support land. It stands out also as a winner of the 2011 Horizons Balance Farm Environment Award.
Wairarapa rural properties have been in demand this summer but many prospective vendors are apparently waiting for further improvement in selling conditions.
Listings has increased this season and there were eight finishing properties sold over the four months to 30 January. The median price for these was a significant increase from 2015-16 to $33,300 per ha. The sales included $5.15 million paid by South Island-based interests for a 712 ha farm in Wairarapa’s eastern hill country. Local buyers acquired “Springfields”, a 43 ha sheep and beef finishing property on the fringe of Masterton for $1.85 million.
The milk price recovery has stimulated interest in the region’s dairy farms although these tend to be tightly held, with little debt. In the latest four month period, one 39 ha dairy changed hands for $34,800 per ha. (There was one sale in the corresponding months of 2015-16, at $25,400 per ha). Wairarapa has not seen any major dairy conversion for several years.
Some moderation in the price expectations of both vendors and buyers is expected as 2017 proceeds. Like other regions, Wairarapa has significant numbers of farm owner-operators now contemplating succession and this could bring more properties to the market over time.
Honey production is driving strong interest in properties with remnant manuka stands and/or potential for new manuka plantation. These blocks are being valued at prices equivalent to grazing land.
Canterbury & North Otago
The Canterbury rural property market is more active as confidence returns to dairying, and as buyers also look closely at the region’s available arable and livestock farms.
The number of sales has picked up this season, including some properties that had been on the market for much of 2016. Prices, however, have moved little overall and buyer interest is strongly biased towards lower-risk properties that have reliable irrigation and proven high productivity.
Canterbury-wide, six dairy units changed hands over the four months ended 30 January 2017, with the median price per hectare marginally higher than in the corresponding months of 2015-16. Among the most recent sales, a 148 ha farm in the Westerfield district of mid Canterbury reached $57,000 per ha (well above the median). This price reflected the property’s assured water supply from the Valetta Irrigation Scheme and the high quality of its infrastructure. In the Dunsandel area, $15.5 million was paid for a large-scale dairy operation on 373 ha, most of this covered with pivot irrigation.
Recent sales have included two other properties on the Valetta scheme that are also partly used for cropping. Six arable properties sold in the four-month period for a median price of $35,500 per ha, slightly ahead of 2015-16.
In dry stock, Canterbury saw 26 finishing farms sold in the same months. Properties noted for their better soils and well-developed infrastructure sold at prices significantly higher than the rest. The median price on all finishing properties sold was $31,900 per ha which was down 7% from the comparable figure for the 21 farms sold in 2015-16. Livestock farm values in Canterbury, as elsewhere in New Zealand, are reflecting the current weakness in returns to sheep meat, beef and wool production.
Most buyers across all farming sectors are Canterbury-based, mostly established farmers or rural investors with detailed knowledge of agriculture in the region and with intentions to scale up or rationalise their holdings while debt costs remain low. Offers reflect close analysis of each property’s potential and the associated risks. There is little, if any, dairy conversion occurring in Canterbury this season.
As autumn approaches the number of listings are starting to lift, and properties of quality and tidy presentation are attracting interest at any early stage. One example is Tironui, an extremely well-developed 627 ha farm in the Hakataramea Valley. Tironui has a highly efficient lamb breeding and finishing operation, an excellent cropping record, extensive forestry plantations and a good business growing dairy replacements.
For further comment, contact Mark Lemon 027 339 6665