There is no question that last year was a roller coaster. The pandemic challenged us once again, and the property market proved to be an integral part of the economic resilience of our country. It was not only capital cities and regional residential markets across Australia that experienced an unprecedented property boom. In South Australia, decisive buyers underpinned record prices in rural property and farmland. According to Rural Bank, the median price per hectare of Australian farmland increased by 12.9 per cent in 2020 to $5,907 per hectare. In South Australia, it rose for the fifth consecutive year. Father and son team Daniel Schell and Geoff Schell, directors of Ray White Rural South Australia, share their insights on the rural property market in South Australia and the year that was.
1. What was your most memorable sale of the last year?
Geoff: All 47 sales transactions we managed this year have been incredible. We sold pastoral properties, prime cropping land, vineyards, water and irrigation, horticulture, grazing and lifestyle properties from the Western Eyre Peninsula to the lower South East and everywhere in between. The sale of the Skillogalee Winery and Vineyard assets in the Clare Valley was a real standout for our team. There is a lot of excitement and investment in the Clare Valley at the moment and it was an extremely competitive sale.
Dan: Yes, most definitely. Dave and Diana Palmer had developed the 124 hectare property for more than 30 years into a world class food and wine experience, with a unique restaurant and accommodation facilities. It’s right in the heart of the Clare Valley with 51 hectares of premium vineyard plantings, winery plant and equipment, water licence entitlements plus the highly regarded Skillogalee brand & intellectual property and more.
Geoff: Our Ray White Rural SA team developed an extensive marketing strategy to generate National and Global buyer interest. The successful purchaser was Simon Clausen, the Adelaide-born technology investor, after a 7 week marketing campaign for over $6.5M. Mr Clausen plans to invest substantially in the property over the coming years which will be a wonderful outcome for the region.
2. Who is buying South Australian farmland?
Geoff: There’s a mix of enquiry from both corporate and family farming enterprises, foreign and domestic interest. But we found regional farming family businesses had a profound impact on sale prices this year – ‘Boudaglen’ & ‘Acacia Glen’ in the Pekina area, for example, was an outstanding parcel of 860 ha of cropping and grazing land, with excellent improvements and watered by bores and dams.
As part of our marketing strategy, we always extensively market to all the neighbours and surrounding districts, whilst simultaneously running National marketing initiatives and digital lead generation to ensure every possible buyer is aware of the sale. The volume of interest for ‘Boudaglen’, especially considering some tough regional seasons in the previous 3-4 years, was extraordinary with over 65 enquiries, 10 registered bidders on auction day and the competition from neighbouring buyers and ‘out of district’ bidders pushed the sold price to a combined price of just over $4.6million for the 2 lots, with nearby inter-generational farming families expanding their existing holdings.
Dan: Another change we’ve also seen over the last three to five years is the entry of smaller private investors to the market who make up probably about five to 10 percent of our buyers. They are people who see Australian Agriculture as a positive investment option and are looking to lease back to proven experienced operators.
3. Has there been a change in buyer behaviour?
Dan: This is a large part of what we have seen develop over the course of the pandemic. Farmers are taking advantage of historic low interest rates and readily accessible credit to expand their operations. At the same time, as land prices increase, they are being pushed out of the districts where their primary site is located. Subsequently, these farmers are positively viewing neighbouring districts and further away for expansion options. For example, a farming enterprise may have its core broad acre enterprise in the Mid North, but a grazing property in the Pastoral regions of SA. They have the opportunity to shift stock between blocks to manage seasonal variation and take advantage of the other block. It eliminates risk for many and this approach to expansion is becoming commonplace.
4. What have been the biggest trends in the rural market in the last 12 months?
Dan: This year has been fundamentally different as the demand for farmland has never been higher. The pandemic reinvigorated both domestic and international interest in Australian agricultural opportunities. Combining buyer demand, accessible credit and the strong commodity market, land prices skyrocketed. On top of that, more people have been escaping to the country for a rural lifestyle, and there is rising demand for additional acreage from farmers looking to expand their businesses, and also from larger Agribusiness enterprises wanting to acquire as much property as possible in a favourable borrowing climate.
Geoff: Because of those shifts, we expanded and diversified our operation more broadly in the last year. We partner with Ray White regional professionals in their local markets who field local buyer enquiry while we handle the international, interstate, inter-region and corporate enquiry. That partnership has an enormous impact on price outcomes for sellers, by virtue of creating more competition from all buyer demographics.
5. What critical advice do vendors need right now?
Geoff: In a buoyant market like this, every agent is going to be able to sell and sell better for their vendors than they thought they would have two years ago. But that’s not the same as selling for the premium achievable price. When vendors compromise in their selection of an agent, they potentially will be leaving hundreds of thousands of dollars on the table. It’s critical for an agent to do everything they can to market a property effectively. However in a booming market this doesn’t always happen; due to the limited land stock available, the competition is already there. Agents with superior service, marketing and agricultural nous will leave no stone unturned and incite competition from a wide range of buyers to get the best outcome possible for the vendor.
6. How do you achieve a premium price?
Dan: The difference in dollars is heavily influenced by extensive marketing resources combined with local and on the ground relationships. To get the best outcome for the vendor, everyone needs to be in the game. To reach all potential buyers, from neighbouring farmers, interstate buyers, corporate and big enterprises, you have to have highly experienced marketing operators behind you. For us, the ability to showcase rural properties on a global stage is made possible with our digital marketing and lead generation tools. We ensure to cover all bases for every property including the often overlooked basics of a courtesy call to neighbours leading up to a sale and proactive outreach to big operators and interstate buyers.