Market defies the conditions

Market defies the conditions

Local Business Feature
Ray White Rural SA joint director Geoff Schell is confident the rural property market will continue to be strong in 2020.

Ray White Rural SA joint director Geoff Schell is confident the rural property market will continue to be strong in 2020.

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Despite 2019 being another year of below-average rainfall for many areas of SA, buyer enquiry for rural properties coming to the market during the past 12 months was very strong with some outstanding sales results achieved.

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Despite 2019 being another year of below-average rainfall for many areas of SA, buyer enquiry for rural properties coming to the market during the past 12 months was very strong with some outstanding sales results achieved.

Ray White Rural SA director Geoff Schell said the business completed 25 rural transactions across SA including 17 rural auctions for a 100 percent clearance rate.

The types of properties sold included pastoral property, vineyards, prime cropping land, mixed farming properties, grazing, lifestyle and irrigation properties.

Mr Schell said this has been on the back of a number of factors.

"Sales were helped by solid commodity prices, particularly the strength of lamb/mutton, wool, hay, and grain and the increasing demand for vineyards," he said.

"The cost of finance was at the lowest rates ever seen and there is a generally positive outlook for the agriculture sector in Australia.

"The ongoing dry conditions did not seem to deter potential buyers with many sales of agricultural and grazing land throughout SA exceeding expectations.

"In the reliable rainfall districts, in particular, we have seen demand outstripping supply.

"The southeast of SA has seen a resurgence in enquiry levels in the past 12 months with buyers looking for the higher rainfall and reliability of this region.

"Buyers are looking for secure grazing and fodder/hay production plus the advantages of nearness to markets and processing facilities."

Mr Schell said buyer enquiry has come from far afield with northern SA and NSW pastoralists looking to the feed security and fodder production capabilities of the reliable southeast region and also the mid-north region.

Two significant sales conducted by Ray White Rural SA in late 2019, Pine Drive near Farrell Flat and Spring Creek near Melrose achieved outstanding sale prices at auction with a NSW pastoralist and northern SA pastoralist the successful bidders respectively.

The cropping areas of the Yorke Peninsula and the lower north and mid-north have seen excellent sales results with record prices achieved for selected farming and cropping properties.

Broadacre cropping enterprises are continuing to get larger to gain efficiencies of scale of operation and to allow investment in larger machinery and new technology.

Farming businesses are prepared to look at other areas of the state for expansion to spread risk (rainfall variability) and expand enterprise options.

"With the continued strength of livestock, a number of our clients are also looking to broaden or expand their enterprise mix into the sector," Mr Schell said.

"They have sought opportunities to purchase grazing properties in the southeast and higher rainfall areas of the mid-north.

"There has also been some enquiry for well developed pastoral properties, but the extreme ongoing drought conditions through the pastoral regions have held back transactions in this sector.

"When the drought breaks, and we see a return to normal rainfall conditions in the pastoral areas, we believe there will be solid enquiry from buyers looking to invest in this sector."

The other sector where enquiry levels have increased significantly is that of vineyards.

"There has been increased demand for premium vineyards within most recognised wine regions particularly the Clare Valley, Barossa Valley, Riverland and McLaren Vale regions," Mr Schell said.

"South Australia wine exports rose by 10% in 2019 with China in particular having an increasing thirst for SA wines.

"Buyer enquiry for vineyards is coming from existing players within the Australian wine industry with overseas enquiry for larger-scale operations from Chinese investors in particular."

As we move into 2020, Ray White Rural SA believes demand for rural property will continue to be strong and the business has adjusted accordingly.

"We have recently sold the residential and property management component of our Ray White business, to concentrate our full resources and energy on our Ray White Rural SA business," Mr Schell said.

"We have offices at Clare and also the Ray White Corporate office in Halifax Street, Adelaide.

"We also work closely alongside the 19 Ray White regional offices located right across SA."

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