Large dairy farm sales buck recent trend

6 March 2009

News release

Large dairy farm sales buck recent rural property trend

The linked sale last week of two high value Central North Island dairy farms is a positive signal for the rural property market, says one of the real estate agents who handled the sales.

Andy Scott of PGG Wrightson Real Estate, Masterton, along with colleague Gary Patrick, sold a farm at Kaituna, 15km from Masterton for $5,850,000 million last Friday. Through the PGG Wrightson network they also found a $5 million replacement property for the vendor of the first farm, at Shannon in the Manawatu.

Andy Scott says the sales are good news.

“It is too soon to say that these sales signal a turnaround in the market, but they do demonstrate that there are willing buyers and sellers around, who can be brought to the table if the right deal is available.

“Both these properties are high quality, heavily productive dairy units. As everyone knows, the market has been very quiet over the past few months due to the international financial situation. However, on a per hectare basis, the price on each of these two farms sold over the weekend is comparable to what similar local properties have reached in the few months prior to that, when the market was at record levels,” he said.

The 251 hectare Kaituna farm sold directly after auction on 27 February. According to Andy Scott, the property has a 123 hectare milking platform, with 128 hectares of support land and huge potential to increase production, which the purchasers were anxious to take advantage of. The Shannon farm is smaller at 85 hectares, but was more recently developed, including recent construction of a high quality three-storey executive home. Both farms were sold with around 105,000 paid up Fonterra shares.

Andy Scott says PGG Wrightson Real Estate sold eight Wairarapa farms worth over $4 million in the 2007/08 financial year, but prior to the two sales on Friday, have not sold a property in that bracket since December as the market reacted to the global economic downturn and lenders have become far more cautious about financing farm purchases.

“In recent months, rural property sales have slowed markedly from the sustained record levels they reached prior to mid-2008. As a result, conditions have changed completely for those marketing rural property.

“While the days of just advertising a property and expecting it to sell are well and truly gone, there are, of course, still motivated buyers and sellers out there. Bringing them together requires greater flexibility than has been the case in the past, strong networks and, in the case of rural property, thorough understanding of what is possible in agriculture.

“These sales demonstrate what can be achieved when buyer and seller expectations come into line, and also that not everyone is going to put their lives on hold in the face of the present economic situation,” he said. 

ends

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