THE cotton sector is shaping up as the most active sector in the property market since 2012, with a number of existing operators bolting on neighbours and other investors acquiring new portfolios.
Colliers International, national director of rural and agribusiness, Rawdon Briggs said North American investors would also take the favourable currency and commodity environment as an opportunity to make their first entry.
“This year we have seen a significant increase in the number and size of agribusiness transactions occurring in Northern Australia,” Mr Briggs said.
“Even after the lift in values our farming and grazing land is still significantly cheaper than all of the first tier global agricultural investment destinations such as the US, Canada, UK and Europe.
“In 2017 we expect the total number of transactions to slow down slightly in line with a probable Australian interest rate rise, and the change in capital and demand flows as a result of the new US presidency’s economic and political settings.”
Mr Briggs said the consolidation in agriculture land ownership will continue with either bolt on acquisitions or portfolio role up purchases targeted by HNWI and institutional buyers.
“As a result, the average capital values on each deal will rise,” he said.
Mr Briggs said the launch of the Australian farmland index in Brisbane in November offered corporate agriculture and fund managers the opportunity to measure farmland performance on a quarterly basis.
“This in turn will help North American and European fund managers invest more decisively into Australia.”
Mr Briggs said the northern beef market was considered the hottest in terms of both volume and price in 2016, as evidenced by a number of transactions exceeding $100 million.
“Margins on beef cattle per head have increased significantly, which should encourage further investment in the sector,” he said.
“Also we are seeing more capital investment from existing large family operators.”
Mr Briggs said even though the cereal grain prices were depressed globally, pulse crops and in particular chickpeas would generate huge earnings, driven by demand from the subcontinent demand.
The horticulture industry will be driven by permanent tree crops including macadamias and almonds, where there has been record pricing.
So-called super foods including blueberries and raspberries and other high value controlled environment crops were being driven by significant long term supply agreements with supermarkets.
Mr Briggs said sale and lease back transactions were also gaining significant momentum across all sectors as in-bound investors and high net investors sought eliminate operational risk while maintaining a land-heavy exposure to agriculture. The lease deals completed in 2016 were transacting in a yield band from 5.5 per cent to 7.5pc as triple net lease structures.