Shortfalls of rural land listings drive quiet sales

Off-market land sales boom in reliable areas


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COLLINSVILLE EXPANSION: The Edmunds family has sold Kadlunga, Mintaro, to George and Sophie Millington, Collinsville stud, in one of the state's largest ever off-market transactions. The deal was negotiated by Elders.

COLLINSVILLE EXPANSION: The Edmunds family has sold Kadlunga, Mintaro, to George and Sophie Millington, Collinsville stud, in one of the state's largest ever off-market transactions. The deal was negotiated by Elders.

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Off-market real estate transactions are on the rise as demand continues to outstrip the number of rural properties being advertised for sale in SA.

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Off-market real estate transactions are on the rise as demand continues to outstrip the number of rural properties being advertised for sale in SA.

In the first half of 2019, records have tumbled at several auctions including Granite Ridge at Reedy Creek in the South East which made $10.5 million.

RELATED READING: Undisclosed buyer adds Granite Ridge stud to $10.5m land buy

But many more properties are changing hands before a 'for sale' sign is put up, especially in tightly-held areas such as the Lower South East, Mid North and Yorke Peninsula.

The announcement last week of the sale of Kadlunga, Mintaro, to George and Sophie Millington, Collinsville, Hallett, is believed to be one of the state's largest ever off-market transactions.

RELATED READING: Collinsville stud owners buy historic Kadlunga

Colliers International director of agribusiness Jesse Manuel confirmed the trend, especially for properties in the $2 million to $5m range, where there was a strong pool of buyers.

"Buyers looking to expand are being very proactive and making the agents aware of their requirements or risk missing out on opportunities," he said. "This is resulting in agents building lists of qualified purchasers ready to buy, making it increasingly easier to transact an asset off-market.

"In the last 12 months we have seen a sharp increase operators from the pastoral regions adding geographical diversity to their operations and buying properties in higher rainfall areas to drought-proof their grazing enterprises."

Mr Manuel said properties of scale were particularly sought-after and Colliers were presently negotiating several $20m to $50m transactions in SA and Vic.

"Traditionally, SA has not been as saturated with institutional investors compared to the eastern states, however we have been fielding very strong enquiry from the corporates looking to SA as the next real opportunity, with cropping and grazing enterprises being most sough-after," he said.

"Even though we're seeing higher land prices than we ever have before, given the limited supply of properties for sale, record low interest rates and the strength of demand from such a broad market, there's no doubt we'll continue to see very strong results for the foreseeable future."

Landmark Harcourts SA rural real estate manager Simon McIntyre could not see the short supply of properties for sale changing for the remainder of the year, predicting similar numbers to spring 2018.

"In the Lower SE we have sold a couple of places off market and there is evidence in the records of a whole lot more going on as locals look to expand but there is nothing for sale," he said.

He said demand remained strong for both cropping and grazing properties, driven by high commodity prices but there had been a "pause" in some parts of the state that were still reeling from drought.

Investors showing long-term confidence in agriculture was adding to demand, and the further cut in interest rates was another "leg of confidence" for borrowers.

"In the past 12 to 18 months we have started to see super funds and those investors that have previously looked for commercial property looking to invest in ag property to lease back based on the rates of return," Mr McIntyre said.

SE STRENGTH: The 911-hectare Mundulla aggregation marketed by CBRE by expressions of interest attracted more than 60 enquiries with 25 property inspections. It sold for nearly $8 million.

SE STRENGTH: The 911-hectare Mundulla aggregation marketed by CBRE by expressions of interest attracted more than 60 enquiries with 25 property inspections. It sold for nearly $8 million.

CBRE director agribusiness Phil Schell says the property market remains strong with lots of enquiry, giving the example of the 911-hectare Mundulla aggregation, which they marketed earlier in the year in the SE.

It made nearly $8m to four buyers.

"Land south of Adelaide and in the Lower and Mid North and YP is selling very well and in the SE we have seen an appreciation of values up to 40 per cent in the past couple of years," he said.

But he says many potential vendors are choosing to sit tight taking advantage of strong sheep, wool and cattle prices.

'We certainly don't have the stock levels that we would like," he said.

Mr Schell is concerned there may be a "levelling of the job" with lending institutions making it more difficult for potential purchasers.

"Whereas once the loan to value ratios were 75 per cent or you might have got 80pc, now you are lucky to get 50pc," he said.

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