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Rural Property Pulse Issue 25  |  Summer 2016

Contents Inside > Dairy resurgence and late arriving spring signal active autumn for rural property > REGIONAL UPDATE > HEARTBEAT – New environmental regimes add complexity to rural property transactions > Weather and markets set fair for horticulture sector > Markets for fine and crossbred wool moving in opposite directions > Excellent growing conditions sound a positive note for livestock markets > PGG Wrightson Real Estate offering Landcorp farms for sale

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Dairy resurgence and late arriving spring signal active autumn for rural property Spring started late in much of the country, which meant the traditional spring rural property market did not take off as thoroughly as it generally does.

While the dairy sector is recovering, it has not yet reached the tipping point where confidence outweighs caution. When that happens, it will also encourage positive sentiment and increased real estate activity. When spring arrived, it brought greater than average rainfall to many parts of the country. Some regions, in fact, have received insufficient sunshine for optimum production. This has also held much of the rural property sector in check. On the positive side of the ledger, what we are seeing are highly favourable growing conditions throughout much of the country and the horticulture sector making excellent strides, with strong demand for land able to support grapes, kiwifruit, pipfruit and stonefruit. With regard to dairy, we have a number of tentative sellers throughout the country who are holding back to see what the market will do. Whether they represent a potential ‘backlog’ of listings that might all come to the market at a similar time is not easy to predict. However, as long as the Global Dairy Trade auctions continue to trend in the same direction they have been going over the past three months, these conditions will bolster returning confidence and the market should build through the summer and autumn, likely on a gradual trajectory, with plenty of quality properties offered for sale and meeting well-motivated demand. One additional factor: the devastating 14 November

earthquake, centred at Waiau in North Canterbury, will clearly have an effect on the market for rural property, particularly in those locations that took the brunt of the shaking. Several listings in the affected area have gone on hold as damage assessment, infrastructure reinstatement and the challenge of continuing to farm in drastically altered circumstances take precedence. What effect the quake has on insurance is also something that may take awhile to resolve, throwing another unwelcome uncertainty into the list of factors that surround any property transaction - another challenge, although one that, with care and good communication, we can be confident of sorting out. In the meantime, our thoughts are with all the farming communities in the affected areas and we remain positive about the future potential of their farms. For advice and guidance on any matter relating to rural property, we look forward to hearing from you. Whatever issue you are facing, please contact your local PGG Wrightson Real Estate office to discuss it further. We are New Zealand’s leading rural real estate company and will be pleased to work through all the options, with independent expertise to help you achieve the best possible outcome.

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. Licensed REAA 2008


Regional Update Northland A wet, cold spring meant Northland’s rural property market did not experience its usual seasonal lift. Listings should improve through summer. Interest in larger sheep and beef properties remains positive. Grazing and support blocks generally sold quickly at prices similar to last year. While prospects for the sector are rebounding, questions remain over where the dairy property market will go. New listings in November should sustain early buyer interest. Northland dairy land values seem likely to stay at last year’s levels. One mid-September sale of a 126 hectare Tapora dairy farm continued an emerging trend as the district’s third property sold recently to buyers planning to grow avocados, with multiple purchasers interested each time. With its heavy soils and smaller river catchments, Northland is unlikely to be subject to the level of regulation farmers in some regions are facing to mitigate nitrate leaching. Waikato Waikato’s spring weather discouraged potential vendors from offering farms for sale and while the payout prognosis improved, it is not yet sufficient to give dairy farmers real confidence. Among those spring sales that did proceed, good prices were paid for well-located Matamata farms, including one sold at over $70,000 per hectare to neighbours and cropping interests. Some Waikato farm transactions hint at land use change. One 16 hectare grazing block south of Hamilton was purchased in September with the intent of planting kiwifruit, while other dairy properties are attracting interest from those producing organic and A2 milk, where inputs are manageable and payouts exceed those of conventional dairying. Some significant rural properties should come to the market through the summer and the post-Christmas

period may be particularly busy, possibly with an oversupply of Waikato dairy farms as the season progresses. Bay of Plenty As in various other regions, spring arrived late in the Bay of Plenty, and farmers held off taking property to the market. Property listings rose gradually as summer approached and following the Christmas period, market activity should increase. Dairy activity rests heavily on the payout and if the present cautious optimism continues, more of the region’s dairy properties should be offered for sale before the end of autumn. Kiwifruit orchards account for around one in three Bay of Plenty rural property transactions. As the value of premium land supporting gold kiwifruit climbed through and beyond $750,000 per canopy hectare, and prospects for the growing season appear excellent, a shortage of property for sale is the main factor restraining the region’s horticulture market. Interests already operating in the sector dominate the market and all indications are that values will continue their steady climb. Hawke’s Bay Spring was slow to arrive in Hawke’s Bay, with little initial market activity. Grass growth started in October, when sunshine brought the best out of the previous month’s rainfall, farms increased their visual appeal and farmers became more confident about selling. Enquiry for good Hawke’s Bay sheep and beef units remains consistent, suggesting any that come to the market will be well received. Notable Hawke’s Bay farms offered for sale in the spring included 1136 hectare Waikareao Station in Waipukurau, 790 hectare Melrose wintering up to 10,000 stock units 48 kilometres north of Napier, and 683 hectare mixed cropping farm Awanui 12 kilometres south-west of Hastings.

With transactions on some of these locally significant farms likely to be concluded before Christmas, anyone considering selling in the summer and beyond should have some useful benchmarks to base decisions on. Wairarapa and Manawatu Fewer Wairarapa and Manawatu farms were listed for spring sale this year than is normally the case. As in other regions, uncertainty around the dairy sector and unseasonable weather discouraged farmers from taking property to the market. A sellers’ market therefore prevails, with properties offered selling strongly. Well-established farming families intent on increasing the size of their operations are generally buying. New listings towards the end of the spring and the prospect of some high-profile summer marketing campaigns suggest a change ahead in market dynamics. Two Tararua properties, a 496 hectare grazing property 35 kilometres east of Dannevirke and an 81 hectare dairy farm 2 kilometres south-west of Pahiatua will attract attention. If they sell well in December, a number of other farmers in the region who have been cautious up to now may also decide to sell after Christmas. Nelson and Marlborough Following the 14 November earthquake, those affected have more immediate priorities than property transactions. Once concerns around infrastructure, access and plans for farming through the summer are addressed, the event’s impact on the rural property market can be more accurately assessed. A shortage of listings and high demand for rural property characterised the top of the South Island’s spring market. Property in established Marlborough viticulture locations is not coming to the market, leaving developers to seek opportunities elsewhere, and planting South Marlborough and


Wairau Valley properties in grapes. While grass growth in the region is excellent, dairy sector uncertainty means there are too few farm sales to gauge the market. A 31 hectare grazing and finishing block at Okaramio, Marlborough, sold at auction to a neighbouring farmer in October for $770,000, created steady interest due to its location in a high rainfall area. Canterbury Canterbury’s spring weather was kind, with plenty of rain, while the dairy recovery increased optimism. However, the past two years of drought and low payouts mean many are approaching the region’s property market with caution. A number of North Canterbury sheep and beef properties sold in spring between $1,000 and $1,200 per stock unit carrying capacity, including 656 hectare Clifton at Waikari, 2,400 hectare Marble Point Station at Hanmer Springs, 227 hectare Parham Hill at Culverden and 202 hectare Sulphur Springs at Scargill, the latter selling at auction in October for $3.26 million. Farmers with breeding properties are looking for finishing farms and vice versa. Farms carrying over 5,000 stock units are commanding a premium. Wariness around the lamb market is sapping some confidence, although prospects for fine wool are encouraging. Canterbury’s dairy property market saw little spring activity. West Coast Climatic conditions and the dairy industry’s slow return to profitability hindered the West Coast’s spring rural property market. Particularly wet weather hampered productivity. Dominated by dairy, farmers are waiting for the fortunes of local cooperative Westland Milk Products to turn around. Although Global Dairy Trade auctions trended in a positive direction through spring,

unless the payout prospects improve further, there is little appetite to buy or sell property. Recent prices for West Coast dairy farms have ranged from $20,000 to $25,000 per hectare around Hokitika and $15,000 to $20,000 per hectare in South Westland. However, with few sales completed in spring, determining whether these values remain current is not easy. As in other regions, if the payout continues to rise, the number of properties available for sale may increase substantially in late summer and autumn. Mid and South Canterbury Activity in Mid and South Canterbury’s spring rural property market was slow. As vendors deferred decisions, similar to last year, a busier than normal autumn looks likely. Improving sentiment among dairy farmers should provide impetus and a 234 hectare Rangitata farm with potential for dairy conversion, offered for sale in November and now on the market, will gauge buyer appetite. Favourable weather means excellent grass growth, although after two years of destocking, local farmers have found using it a challenge. One of Mid Canterbury’s blue ribbon arable properties, a 228 hectare spray-irrigated farm on premium soils, changed hands in November just short of $44,000 per hectare, consistent with recent values for such farms. After a 10 year hiatus, a number of substantial Mackenzie properties have been granted extended water consents, which will increase their land use options and values in the event they come to market. Otago Otago’s outstanding spring featured excellent lambing and strong livestock sales. Rural property activity accelerated as the season proceeded. South Otago attracted strong enquiry for forestry plus

sheep and beef properties. Nine forestry blocks offered by tender throughout the region received exceptional enquiry from local investors and corporates. Landcorp’s Copper Road, a 1,483 hectare Balclutha farm, is for sale by tender. Numerous properties between 2,000 and 3,000 stock units have sold, ranging from $1,000 to $1,200 per stock unit, fully firm on last year’s market. Recent Taieri sales exceeded $50,000 per hectare. While interest in dairy remains subdued, one $40,000 per hectare South Otago sale may generate activity. North Otago dryland blocks are selling around $20,000 per hectare, with sheep and beef units around $1,000 per stock unit. If commodity prices continue their positive trends, Otago’s rural property market should remain buoyant through summer. Southland Caution characterises prospective purchasers of Southland farms, whose perception of value appears to be 10 per cent below those of the region’s vendors. However, the lack of sales makes gauging precise values difficult. Eight Southland farms greater than 40 hectares sold in the three months to November, including one dairy farm. For the same period in 2015, 20 farms sold, of which three were dairy farms. Southland is currently a buyers’ market, with a good selection of farms for sale, especially dairy properties. Two substantial Landcorp farms will be offered for tender in January: 2,862 hectare Mount Hamilton Station between Te Anau and Mossburn, and 1,359 hectare sheep and beef property Jericho Farm, 16 kilometres from Manapouri. Other notable Southland properties for sale include a 512 hectare Northern Southland sheep and beef property and a 928 hectare Gore deer, sheep and beef farm. 


Heartbeat – New environmental regimes add complexity to rural property transactions Are rural property values really going to fall nationwide by $40 billion?

A new regime is evolving to regulate changing land use. In a recent report, a prominent rural economist estimated that environmental limits on water and nutrient use could discount nationwide rural property values by $40 billion. Environmental protection regulations are becoming a fact of farming life in many regions, initially the Central Plateau, Otago, Southland and Canterbury, although the whole country is set to come under similar rules over time. Nitrate leaching to groundwater is generally the critical issue. Farms must comply with specific limits. This will typically affect stocking rates, fertiliser application and effluent spreading. Under the regulations now in force in various regions, each property requires its own farm environment plan, which stipulates the limits on various farming activities. Such plans influence farm profitability and therefore land value. Where this system is fully in place, before a farm changes hands, prospective purchasers will seek information on what restrictions they would face when farming the land. When bank equity is required to secure a purchase, banks also need to know this

information as it directly impacts on the property’s business case. Those who attempt to sell land without a farm environment plan will find the purchaser takes considerably longer to do their own due diligence on this aspect of the farming business. In those parts of the country where clean streams regulations are fully established, the market may discount the value of those properties that do not have farm environment plans. Those farmers who have not already done so, need to address this issue or they will run into hurdles when they decide to sell land, if not before. In those regions where the regimes are coming into force, dairy farmers who are part of Fonterra’s clean streams accord, or similar dairy company programmes, will find it easiest to adapt. Regions with larger river catchments and lighter soils are generally first in line for these regulations, while those with heavier soils are unlikely to need such stringent regulation as nitrate leaching is less of an issue. Taupo was the first catchment where such a system was introduced. While farmers initially struggled and property values were affected for a number of years, after a period, the market adjusted and farmers accepted the new regime as a fact of life. Now those who are buying will carefully research the restrictions, which vendors will be ready to assist with as far as possible. As the changes come into place elsewhere, farmers on Canterbury’s

shingle plains, where water leaches directly through the land and into the rivers, will need to monitor stocking rates and adhere to limits that may be lower than they have previously been accustomed to. Depending on location and present practice, limits could possibly be up to 25 per cent lower than farmers have formerly worked to. Changes are likely to start impacting on farms in the next 12 to 15 months. Meanwhile, Southland’s new regulatory regime is further into the future, although will probably also have ramifications across the province. Limits on land use are likely to affect some localities more than others and may include not allowing dairy cattle to wintergraze without resource consents. Restrictions could also come into place on the amount of land that a farm can have in a winter crop. As these programmes are implemented throughout the country, farmers will find ways to innovate within the restrictions. In some regions, they may be able to trade the likes of nutrient applications or stocking rates with their neighbours within a catchment so that collectively they remain within the limits of tolerance for a particular river or water body. In the end, the value of land is related to the returns it can generate. If limits to land use are implemented so that productivity is reduced, discounted property values are inevitable, at least while farmers adapt to the new system. Whether that discount will be in the $40 billion range will depend on the ingenuity of farmers to continue to derive value from their land once present farming practices are constrained and how long it takes to find the most effective ways to work within a new system.


Weather and markets set fair for horticulture sector In terms of both international trade and prevailing climatic conditions, the horticulture sector continues to enjoy a generally favourable environment.

Across most of the main crops, including grapes, apples, kiwifruit, other sub-tropical varieties such as avocado, and the vegetable sector, all have enjoyed good trading conditions this year. Export demand for grapes, apples and kiwifruit, in particular, is stimulating further development among growers of those fruits. However, rather than rushing in to capitalise on short-term gains, growers are generally following well-considered and prudent project plans. In some instances, development planned for last year was postponed and will now

go ahead this year instead. Although there has been some caution around the influence Brexit may have on the market, alongside the uncertainty associated with the United States election, growers are generally expecting to continue operating in favourable conditions with strong market demand. After a good start, which was better still further south, the main horticulture areas have been far wetter than normal, providing growers with some challenges. For those relying on easy access to land to sow or plant crops, the damp conditions have been restrictive, while for those growing tree crops, disease pressure has increased. Motueka and Tasman both suffered hail events in October. Being early in the season reduced the impact somewhat, although still posed serious problems for some growers and crops. Initial indications are that, in terms of both climate and trading conditions, this year will be as good as last, in other words excellent. Regarding the latter, much depends on what is going on in the production regions

of the northern hemisphere, where over-production and surpluses could cut into New Zealand’s opportunities. At this stage, however, those factors appear unlikely to create much impact. While our levels of production for horticultural crops are small in comparison to other global producers, our fruit and vegetables meet the highest standards, which drives demand, with our markets prepared to pay for quality. Generally, our growers understand the value of crop and plant management with the right balance between best practice and plant health providing greater yields, high quality and maximising returns. Understanding the requirements to maximise yields and achieve the crop quality the market demands needs to be the focus rather than solely the cost of production. Best practice says this is the formula for success. 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.


Markets for fine and crossbred wool moving in opposite directions Returns for crossbred wool have dropped considerably this year, although prospects for those who grow fine wool have improved, with better prices appearing sustainable over coming seasons.

When international currencies reacted negatively to the United Kingdom’s Brexit vote in June, Chinese manufacturers took the opportunity to sit out of the market and therefore reposition the price of crossbred wool. As this coincided with a global oversupply, the crossbred indicators have dropped from $5.90 in April to just $4.11 in November. As is invariably the case, supply

and demand are the biggest drivers. International supply lines are now full and New Zealand growers, brokers and scours are withholding an estimated 120,000 to 150,000 bales of crossbred wool. Because of what has happened to the price over the past eight months, much of that wool is now worth between $1 and $2 per kilogram less than when it was first put in store. With the main shearing season now looming and big additional volumes of New Zealand crossbred wool coming onto the market over the next few months, this situation is not going to improve any time soon, in fact the reverse. Funding the purchase of the new season’s wool is likely to become an issue. Wool growers who have taken out forward supply contracts are largely protected from these risks and can expect to receive between $1 and $1.50 per kilogram above the current market price. While crossbred returns have dropped, fine wool prices have generally increased over the past year. International manufacturers

of leisurewear and cyclewear have developed innovative ways to create garments where merino fibre sits next to the skin, alongside manmade fibres on the outside, allowing for breathability and easy dispersal of perspiration. These innovations have increased demand for fine wools, particularly in the 18.5 to 20 micron range and, as more global manufacturers realise the desirability of this apparel, that demand should remain consistent for the coming seasons. PGG Wrightson offers contracts on most types of crossbred and fine wool. As global apparel manufacturers further develop their use of fine wools, PGG Wrightson is actively sourcing those manufacturers and placing contracts with them. Growers who have safeguarded themselves by taking out those contracts are now sitting in a positive position.

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


Excellent growing conditions sound a positive note for livestock markets An exceptionally wet spring through much of New Zealand, after many farmers de-stocked over the past two years due to drought and the reduced dairy payout, resulted in inadequate stock numbers to make the most of the abundant feed on offer.

In some parts of the country, particularly North Island dairying regions, lack of sunshine means growing conditions are three to four weeks behind an average spring. Among dairy farmers, livestock markets reacted to increasing confidence from the improved Global Dairy Trade auctions that translated into a lift in the Fonterra payout. Most farmers are milking the bare minimum number of cows this season so are looking to lift herd sizes next year. Increased market activity is therefore in prospect after Christmas. While an air of confidence prevails, farmers are being realistic, suggesting a steady improvement ahead rather than dramatic gains. Good quality dairy herds are listed for sale from 1 June 2017, valued between $1,800 and $2,200 per head. These are list prices only. Whether the market will meet those prices should be indicated when sales commence, likely from late December and January. Prices for beef cattle remain buoyant in both the North and South Islands. In the latter, this was further stimulated by a lack of stock due to the past two years of drought, which finally broke in the spring. With plenty of feed now available, stock prices are strong, particularly for steers and heifers, with the former selling at $3.50 per kilogram liveweight and the latter at $3.20. Taking calves from dairy farms at four days old and moving them on at 100 kilograms has been popular this year, mainly under forward contracts. This has a low entry point and offers good opportunity

for margin within the current beef schedule, particularly as feed should remain strong until at least midDecember. While the season remains favourable for farmers and the outlook for prime beef looks encouraging, there are signs of downward pressure on manufacturing beef as overseas markets soften. Exporters will play a role in the market as the summer progresses. Although the profuse pasture is telling farmers one thing, export markets may have a different message, particularly in January and February, at the same time as the ground starts to dry out. Demand for all types of beef cattle bulls has increased, with prices up by around $300 per head compared to last season. Prospects for sheep are less encouraging, with caution around the lamb schedule. Farmers are concerned about margins. Limited numbers of lambs have sold privately for around $2.50 and $2.60 per kilogram. As with beef, how the season progresses for sheep farmers depends largely on what signals come through from export markets. While most exporters are reporting reduced sales into Britain, the United States market for lamb is steady. Looking longer term, the market is chasing facial eczema tolerant rams, particularly in those areas of the North Island hit by the disease last year. Farmers are looking for safeguards, although effectively breeding resistance into a flock takes five to 10 years. Genetics for early maturing lambs are popular as farmers look to add value to their product. With the abundance of grass, farmers are also taking the opportunity to restock supplementary feed, filling their hay barns again and replenishing silage pits. This report was prepared in consultation with PGG Wrightson’s Livestock team.


A portfolio of Landcorp farms across the country, potentially totalling around 11,650 hectares, will be marketed over the next few months by PGG Wrightson Real Estate, which has secured an exclusive listing for the properties.

“In the regions where these properties are situated, there is a shortage of farms for sale of the quality and scale that these exhibit. As the country’s largest farmer, Landcorp has an excellent reputation and these farms present favourably. We expect prospective buyers will be keen to inspect them and anticipate they will attract solid offers,” he said. Two of the properties, 1,483 hectare Copper Road Farm, an extensive sheep and beef breeding property 88 kilometres south-west of Dunedin; and 472 hectare Caroline

TENDER

Terrace, a cattle grazing block with development potential on Cape Foulwind Farm near Westport, go to market this month. First rights of refusal for various iwi are in place on a further eight properties in the Landcorp portfolio. Depending on iwi decisions made relative to those rights of refusal, any farms still available are expected to be offered for sale in late January and early February 2017. For further information: Peter Newbold PGG Wrightson Real Estate General Manager M 027 484 5964

TENDER

Landcorp - Copper Road Farm

Landcorp - Beef and Bees

A medium-sized sheep and cattle breeding property in Otago and in total comprises 1,483ha, carrying approximately 11,000 stock units. It is a well-developed tussock paddock property with a focus on sheep and cattle breeding, capable of finishing lambs or supplying forward store stock. Subdivided into 112 paddocks with central lane systems and a very good standard of fencing.

Approximately 300 hectares in young manuka and approximately 170 hectares in medium to rough grazing. Infrastructure includes considerable eight-wire fencing, sealed airstrip, good size fertiliser bin and large cattle yards. The property is located close to Westport with excellent views over the greater Westport area and out to sea.

www.pggwre.co.nz/GRE24925

www.pggwre.co.nz/BAL24929

Licensed REAA 2008

PGG Wrightson Real Estate offering Landcorp farms for sale

Mainly sheep and beef units, the properties should attract an enthusiastic response, says PGG Wrightson Real Estate General Manager, Peter Newbold.


A closer look... Sheep and Beef

Spring market activity was steady in most areas, particularly for sheep and beef farms with scale. Those under 400 hectares or with carrying capacity below 4500 stock units are less readily sought after. Inquiry for blocks capable of producing manuka honey eased somewhat as buyers realised not all such properties are automatically suitable for honey production. Unfavourable climatic factors and a comparatively late spring meant fewer properties came to the market than expected, although additional farms should list for sale in summer. Buyers are reasonably active. When assessing a farm, along with commodity prices, the state of the dairy market and a property’s location, they also now have proposed environmental legislation to take into account. As a consequence, regulations limiting nitrate leaching to rivers will undoubtedly influence demand for drystock farms, at least until their impact on individual properties becomes clearer.

North Island Dairy

Spring demand for North Island dairy property was cautious, with a gap between vendor and buyer value expectations. This may close in summer. A 340 hectare dairy farm near Rotorua sold in early November for $23,000 per effective hectare. A 252 hectare dairy support property for sale with a late November tender date is also suited to beef finishing. Both the price and the purchaser’s intent will be monitored. Some purchasers are looking for land suited to lower-volume, highermargin farming options: a 16 hectare grazing block south of Hamilton sold in September for kiwifruit; Waikato dairy properties are attracting interest from those looking to produce organic or A2 milk; a growing cluster of farms around Tapora, north of Auckland, have sold for conversion from dairy to avocados; and deer farmers are taking an interest in the sale of Taupo dairy support properties.

South Island Dairy

Despite excellent growing conditions, few South Island dairy farms sold during the spring. Canterbury grass growth was abundant, although following extensive de-stocking, farmers had more feed

than they could use. Southland had one of its best growing seasons for the past three or four decades, with on-farm production up by as much as 15 per cent compared to the average. However, the property market remains cautious, and farmers are reluctant to commit to buy. Prevailing values for premium Canterbury dairy farms exceed $50,000 per hectare, excluding shares. Meanwhile a good stock of Southland dairy farms was on offer heading into summer, ranging from 100 to 300 hectares, plus some larger. While purchaser reluctance means activity will likely remain low until February or March, after that, when dairy farmers will have clearer expectations on the payout, the market could become considerably busier.

Viticulture

With considerable damage caused to processing facilities, the Waiau earthquake will affect wineries. How that impacts the property market remains to be seen. A vineyard development entity purchased a substantial Northbank, Wairau Valley sheep and beef finishing property in spring, intending to plant around half of it in Sauvignon Blanc vines. This set a price precedent for similar land and several other blocks have been signed up for viticulture. Purchasers, including promoters of a syndicated vineyard model of development, are likely to remain interested through the summer and beyond, keeping the market healthy. Although flourishing wine exports are driving buyer appetite for well-located property, market activity in spring was infrequent. Those who are selling have high value expectations. In-fill land in established areas is therefore scarce, motivating larger companies to look further afield to convert South Marlborough and Wairau Valley pastoral property to viticulture.

Kiwifruit

Kiwifruit property continues to sell at record levels. With its season ahead of green kiwifruit, the crop set by late October and therefore returns reasonably easily forecast, gold orchard sales occurred before the end of spring, continuing to exceed previous record values. After some sales passed the $750,000 per canopy hectare mark, including an 11.5 Te Puke property that sold for $7.68 million, other transactions proceeding in late November suggested the top value for gold kiwifruit orchards

could reach the $800,000 per canopy hectare threshold this summer. Although less sought after, during the summer, green kiwifruit properties are likely to change hands at similar values to last year, around $400,000 per hectare for premium orchards. Interest is dominated by existing orchardists and packhouses. While orchard prices continue to rise, apparently without limit, industry knowledge supports strong prospects for kiwifruit for at least the next five years.

Pipfruit and Stonefruit

Hawke’s Bay’s market for orchards remains keen, buoyed by the continued export strength of apples and further fuelled by a shortage of suitable land. Although one of the major factors influencing the market is a lack of listings, additional orchards are expected to come forward early in the new year. Newcomers from other areas with equity and aspirations for property are attracted to Hawke’s Bay’s climate and lifestyle. Their influence is helping maintain market momentum, with purchasers acquiring horticultural property with houses or building sites then leasing the productive land to commercial growers. Land values sit between $80,000 and $100,000 per hectare.

Cropping

One premium Mid Canterbury cropping farm sold during the spring, a 165 hectare dryland property on Lismore soils, which changed hands just short of $40,000 per hectare, a value consistent with other recent sales of similar properties. Such farms are always in heavy demand. Although outsiders expressed interest, established Mid Canterbury cropping farmers prevailed to purchase the property. Unlike a few years ago, cropping farms are not being bought for dairy conversion, although dairy prospects continue to have some influence on the market for arable property when farmers can gain favourable returns from planting feed wheat and feed barley. If dairy returns keep increasing, demand for those crops is also likely to rise. Whichever direction that demand goes, most farms on premium Mid Canterbury cropping soils have multiple other options.

www.pggwre.co.nz

Rural Property Pulse  

Issue 25 - Summer 2016. Independent, relevant and up-to-date information on rural real estate. Sourced from our network of rural sales profe...