Sydney, 02 May 2016 – A wave of growth in Australia’s rural sector is positioning agribusiness as the next top ticket item for investors, with foreign and domestic buyers going head-to-head in the sales arena amid unprecedented demand for assets.
CBRE’s latest Capital Markets Research Review highlights an upturn in investment activity in Australia’s agribusiness market in 2015, with $16 billion in assets changing hands over the 12 month period.
CBRE Agribusiness Regional Director Danny Thomas said demand for institutional grade agribusiness assets had reached unprecedented levels.
“Foreign investors are now competing head-to-head with resurgent domestic investor demand, despite a favourable change in the $US exchange rate,” Mr Thomas explained.
“A new norm in beef prices has restored confidence to a large part of the sector, with a consequent increase in purchaser enquiry, and the irrigated row cropping and edible nut sectors are also experiencing strong demand, despite recent downward shifts in farm-gate prices.”
Domestic buyers are being drawn from all areas of the market, including established industry families and corporations; first time financial investors; domestic HNW investors; and new/young farmers.
In tandem with the surge in domestic interest for agribusiness assets, the report also shows a surge in the level of Chinese investment during 2015.
While still accounting for significantly less than US and European investment in the Australian rural market (less than 10%), there was a notable uptick in transaction activity from Chinese groups to circa $400 million in 2015.
The most notable transaction was the reported $280 million sale of Van Diemen’s Land Company, comprising 25 dairy farms over circa 20,000 hectares of land in north-west Tasmania, to Moon Lake Investments – owned by a Chinese billionaire.
“Foreign investors are particularly focused on large scale opportunities, with the most “in demand” sectors being beef – both in northern and southern Australia - edible nuts, irrigated row cropping, dryland cropping and dairy farms,” Mr Thomas said.
The report shows organics, nutritionals and seafood are the hottest post-farm gate sectors, and the rapid increase in the value of tradable water entitlements in southern Australia is also drawing significant investor interest.
Mr Thomas said the pace of investment in agribusiness was expected to gain momentum in 2016.
“In the current climate, farms (for US dollar investors) are looking cheaper, which will inevitably have a positive impact on the level of investment interest,” Mr Thomas said.
“The commodity price outlook also remains relatively favourable, which will further underpin demand in the sector.”
For Australian/international news or global stories, follow us on Twitter. CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2015 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.About CBRE Group, Inc.
