Nothing this good lasts forever, maybe not even next season

Thursday, 20 January 2022


2021 was a bumper year by all accounts. December was Property Brokers’ strongest ever month with 51 rural sales equalling $233m, and just under a billion dollars of rural farm sales for 2021, equating to 50,000 ha’s of rural land throughout heartland New Zealand.


Our Farmlands strategic partnership has underpinned the tangible financial benefits we now deliver to our farmers and growers. Most importantly, we have first-hand insights on what is driving our rural real estate market nationally on behalf of our vendors.

We have invested significantly in our national rural network over the past five years. This has greatly assisted the role we now play in supporting rural New Zealand.

Demand for horticulture land is still very present, predominantly from equity-funded buyer interest. Given the sector typically reflects very specialist and location-sensitive businesses, it’s often difficult to generalise; however, demand continues to set new benchmarks for value, particularly for proven gold kiwifruit orchards. The buyer pool is typically the more sophisticated larger-scale business with ready access to capital.

The most significant appreciation in NZ rural land values has been with our sheep and beef sector; we have had a five-fold increase in the total value of rural land sold to forestry over 2021 compared to the prior year

The window over the next six months to sell a sheep and beef farm for a premium has never been stronger.

However, we don’t foresee the current market forces carrying into 2023 on the same basis. Interestingly, the Ministry for Environment is already consulting with the industry on options to moderate existing ETS policy settings as the carbon price tracks to $100/tonne, and emitters double down on exotic permanent forests to offset GHG liabilities.

The median sale price for our sheep and beef stations sold to forestry in 2021 was $9,600/ha, up from $5,900/ha in 2019. The current carbon-only demand (set and forget) will likely come under increased scrutiny in 2022.

Vendors looking to capitalise on the current window might want to consider that decision this season, not next. Long term, current pastoral land values are expected to hold up but on a more sustainable basis. This will likely include a more robust farming/ forestry model and a much stronger focus on native planting/regeneration of genuine marginal land.

Beef finishing properties are expected to hit new value points in 2022 as improved hill country balance sheets look for better ground. In some regions, e.g. Manawatu, beef finishers will pay dairy prices for quality finishing farms, including preparedness to de-convert proven dairy businesses.

The other significant shift for us has been the dairy market. We sold 70 dairy farms in 2021 for a median price of $42,000/ha, up from 44 dairy farms ($28,000/ha) in 2020. This now gives us a category leadership position in national dairy farm sales, with $445m sold over the calendar year of 2021.

We have seen appreciable lifts across the country by both value and volume, with the most substantial value gains in the Waikato (Property Brokers median $48,700/ha) and Canterbury (Property Brokers median $50,000/ha).

The dairy market, in our view, still represents some of the best value buying of any rural land class on offer in the NZ rural market.

The forward outlook for dairy continues to be very positive; the product itself is a whole food, from a predominantly grass-fed ration, produced to one of the lowest carbon footprints in the world. As a nation, we remain committed to reducing our total GHG emissions. Our NZ dairy systems are already methane neutral, and agri-tech continues to accelerate further methane reduction solutions.

Fonterra is in the best position in a long while, and no other major NZ industry continues to de-leverage at the rate our dairy sector has through the global pandemic. It is hard to imagine a combination of more favourable factors supporting a market. This is a classic case of the expensive land being very cheap relative to other land use options, particularly when you factor in the underlying future confidence in a sustainable dairy return.

Our view is the dairy market will continue to strengthen in 2022, and we look forward to taking an active part in that story.

Despite farming cashflows and balance sheets being in the best shape in a generation, access to new capital continues to be rationed under tighter and tighter regulatory frameworks. The confidence to operate and the size of the potential buyer pool, particularly for our dairy listings, often comes down to the quality of the information available at the time of listing. Our approach focuses on ensuring all apparent operational compliance is addressed well ahead of time to ensure the ‘grey’ with compliance frameworks is adequately dealt with on behalf of buyers and their advisers.

A vendor’s decision to sell a rural asset is never taken lightly, even when the market is running hot. For our part, vendor-agreed sales and marketing campaigns, and a discipline of not accepting first offers, has captured many of the year-on-year value gains on behalf of our vendors.

For those contemplating their farming options for 2022, please do not hesitate to reach out to us; we are happy to have informal conversations that sometimes can take several seasons to crystallise.

For those wanting to act now, there has never been a better time to contact us. Our business has never been more ready; our national network gives us the option to truly back our own story and deliver on your objectives.

We go to market with our Autumn Rural Outlook in the first week of March. We are accepting expressions of interest now for anybody wanting their property showcased across 75,000 rural letterboxes nationwide this autumn.

For rural and lifestyle property advice from a national team of committed salespeople, supported by our expert marketing team, right across New Zealand, call 0800 367 5263 or visit pb.co.nz.

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