ANOTHER strong year for the Western Australian rural property market has been remembered for the 2020 calendar year, despite the unprecedented circumstances brought on by COVID-19.
For a period of four to five years, the market has continued to have high demand from buyers in combination with a lack of properties for sale - fundamentals that were again reflected in the past year.
2020 has seen several high profile sales, changes to industry regulations, more auctions and local farmers have proved they are just as serious and competitive as corporate buyers and investors in securing premium properties.
Believed to be the most valuable broadacre farm sale in WA history, Erregulla Plains, Mingenew, was finalised in February and set the scene for the market in the months to follow.
The 22,192 hectare property was purchased by Daybreak Cropping in a walk-in, walk-out deal for $97.62 million from the Smart family through Ray White Rural WA (RWRWA).
The land sold for $90.6m, equating to $4082 per hectare and the plant and machinery was sold for $7.02m.
Daybreak Cropping is a national broadacre cropping business formed from a partnership between Warakirri Asset Management and Canada's Public Sector Pension Investment Board (PSP), which has other investments in WA and interstate.
RWRWA director Hugh Ness said while the deal has been a highlight for the company, it remains focussed on achieving the best result for its clients, not matter the transaction value.
"It was a highlight for us as it's an iconic property in WA and it was a privilege to be involved in the sale, however real estate is a people business and the size of the transaction, although impressive, is not really what it is about," Mr Ness said.
"Getting a great result for someone who only has a small asset is just as rewarding.
"We have been involved in the rural real estate industry since 1984 and getting great outcomes for all our clients is what it's about."
The fallen Harmony Agriculture and Food Co listed its beef cattle feedlot at Burakin for sale in March, with price expectations of more than $5m.
The feedlot was being sold on behalf of secured creditor NAB after Harmony went into liquidation in September 2019 and a receiver was appointed to take charge of the company's assets.
When COVID-19 infiltrated its way into Australia in March, rural property agents reassured the sector that the market would likely remain resilient.
And if the sales achieved later on in the year were any indication, agents were right on the money.
But before any sales could take place for the 2020 selling season, the Foreign Investment Review Board (FIRB) announced temporary changes to the review framework.
Its aim was to provide greater scrutiny and protection for vulnerable and distressed farmers or businesses who were forced to sell due to the pandemic and that farmland and agribusinesses would not be snapped up by opportunistic overseas buyers.
The changes involved the Federal government reducing the monetary threshold for foreigner's cumulative investments, of whom were intending to invest in Australian agriculture, from $15m for farmland and $60m for agribusinesses to $0 for both, thus all purchases by overseas buyers would require approval by FIRB.
The rule changes sparked concern from the real estate industry that genuine foreign buyers would be deterred from investing in Australian agriculture.
The increased volume of applications that required screening by FIRB meant that the approval process would take up to six months, as opposed to 30 days in the previous framework.
Some industry figures said the process could slow the market down and impact overseas demand, but agents didn't seem very concerned at the time.
Looking back on the year since, Elders Real Estate senior sales executive - rural, Simon Cheetham, said the impact of the framework had been difficult to pinpoint.
As the rules were enforced to prevent foreigners purchasing assets at deflated values, but farmland values across Australia have been generally strong, Mr Cheetham said, "there wasn't really an opportunity for overseas buyers to accumulate farms at discounted prices".
"When the changes were first announced, there was a great deal of uncertainty as to whether applications would be more likely to be declined following the changes and if the full six months would be required for applications to be assessed, and this uncertainty may have deterred some buyers from progressing further and made some sellers cautious of entering into a contract subject to FIRB approval," he said.
"However, the process appears to have worked reasonably well and not proven to be to the detriment of the property market."
Rather than the FIRB changes, the travel restrictions and national and State border closures appeared to have had more of an impact.
"The inability for Eastern States and overseas buyers to inspect properties has been a challenge in 2020 also and has prevented some interested parties from securing land," Mr Cheetham said.
"However, the speed in which farms are selling and the prices they are achieving is proving to be the biggest obstacle for overseas and international buyers to secure land in WA at present."
Although COVID-19 has resulted in less purchases from foreigners, Nutrien Harcourts region corporate and business development manager - west, Glenn McTaggart, said demand from local buyers, both family farmers and corporates, had filled the gap.
"With the demand from local and corporate buyers being so strong, the interest from overseas buyers has certainly subdued over the past two years," Mr McTaggart said.
"Obviously, the restriction of money flow by overseas governments has also had an impact on foreign land purchased across Australia, however this has not affected property values."
The pandemic was also a catalyst for foreign trade tensions.
While barley tariffs imposed by China was not a direct result of COVID-19, uncertainty created by the pandemic and the Federal government's support to investigate the origin of the virus, along with the recent announcement the government planning to take China to the World Trade Organisation, sparked concern of the possibility of losing a key commodity market, which could then filter down to the property market.
This was earmarked as a risk in a Rabobank report, which looked at COVID-19's potential impact on Australian farmland values.
Report author and Rabobank agricultural analyst Wes Lefroy said losing a key market was still a risk which he and his colleagues were watching closely.
"While it still remains a key watch factor, for it to dramatically impact land prices, it would need to cause significant shock to farmers' operating profit and more broadly rural confidence," Mr Lefroy said.
RWRWA director Simon Wilding said industry issues, such as tensions with China, usually took longer to impact the property market and he was optimistic that the sector would remain unscathed by the issue.
"Foreign political tensions with China have not filtered into the rural property market and hopefully they won't - it hasn't impacted on land prices or demand as yet," Mr Wilding said.
"I think this will be a glitch for Australian agriculture.
"The industry is already finding different markets for barley and wine, so I think the demand for our products will still be throughout the world and that the Australian agricultural sector will come out of this quite well."
In April the two premium pastoral leases of Jubilee Downs and Quanbun Downs, near Fitzroy Crossing were offered for sale through Elders.
Owned by Keith and Karen Anderson, and silent partner United States billionaire Edward Bass, the adjoining properties, together spanning 221,408ha, were said to be a 'test' for the Kimberley pastoral market as it had been a few years since it had had a substantial pastoral lease offered for sale.
Then in July, WA rich listers Andrew and Nicola Forrest announced they were the buyers, paying a little over $30m for the properties and a quality Droughtmaster cattle herd of 11,500 head.
The Forrests took possession of the leases in early December.
"Jubliee Downs and Quanbun Downs certainly attracted a lot of attention from serious buyers during the sales campaign (handled by Elders pastoral specialist, Greg Smith)," Mr Cheetham said.
"They offered a significant holding with excellent cattle, with both the cattle and country being meticulously managed by true stewards of the industry.
"The stations attracted a price they deserved and validated the strength of the market and confidence in the long-term future of the Australian beef industry."
Other than the Forrest family's high profile sale, the WA pastoral market was relatively quiet during 2020.
Mr Smith said the pastoral sector has been "quite buoyant" and there was strong demand driven by commodity prices and cattle herd size.
"Kimberley values on a bare basis have probably increased by around 20 per cent over the past three years and southern values are holding firm with some increase on unimproved stations due to carbon credit potential - the amount of that increase at this stage is difficult to quantify," Mr Smith said.
"The Southern Rangelands pastoral market has been in a relative state of paralysis over the past few years due to the anticipated carbon credit potential income that has been talked about, but it is now starting to become a reality.
"Pastoral lease holders are now reporting the receipt of these payments and once the carbon credit payments become an established income, values should flow through to the market value of pastoral leases."
Well-known farmer and no-till advocate Bill Crabtree, or more fondly known as 'No-Till Bill' and his wife Monique sold their 2300ha Morawa farm to a farming family from Pindar.
Mr Crabtree said the buyers offered the asking price and had similar farming practices and ideals to them, particularly in the power of full residue retention and how sheep deplete residue in marginal areas.
"It feels wonderful because this is the beginning of something really exciting," Mr Crabtree said at the time of the sale.
The couple decided to sell so they could spend more time helping other farmers in less developed countries improve their soils and grow higher yielding crops to feed their people.
Another high-profile figure in the WA agricultural sector, John Nicoletti, spoke exclusively to Farm Weekly this year about his current business strategy of buying farmland with the intention to lease it out or improve it and sell.
He said most of the properties he has purchased in recent years, totalling more than 26,000ha across the Wheatbelt, were leased to who he felt were good operators.
"If I know people who are very good farmers but can't afford to buy land, well I don't mind buying land for people to farm who love and are good at it," Mr Nicoletti said in August.
"Investing in farmland is a strong way to invest your money.
"I see land values in WA as still rather manageable and affordable so that is the road I chose to go down."
Then in September Mr Nicoletti listed his property Cranes Neck, Beermullah, for sale.
He said it was part of his plan to purchase land, fix it up if needed and either sell it or lease it out.
Mr Nicoletti also went into partnership with top national real estate agent, then CBRE agribusiness director Danny Thomas.
The pair first dealt together when Mr Thomas sold some of Mr Nicoletti's large scale farmland about six years ago to Chinese-backed CK Life Sciences on a sale-and-leaseback deal and then another sale to the same buyer in 2016.
In 2019, Mr Thomas also handled the sale of Mr Nicoletti's properties to the Saudi Agricultural and Livestock Investment Company.
Their business partnership involved establishing the Ulupna Pastoral Company and purchased former dairy farms in northern Victoria.
As well as their Kimberley station purchase earlier on in the year, billionaires Mr and Ms Forrest also acquired two properties at Hill River from separate vendors - Black Arrow of 3600ha and Finnies of 1500ha.
The most valuable farm auction of 2021 was Jim and Pam McGregor's premium grazing property, Maybenup, Kojonup.
The property was home to their Ardcairnie Angus stud, which was also offered for sale and sold this year.
Through Elders, the property sold for $10.7m, or $7234/ha, to a consortium of three local farming families; Roger Bilney, Kevin Broom and Craig 'Monty' and Shelby Radford.
"Elders was really proud of the entire Maybenup campaign and the result on the day was a real credit to Elders Real Estate sales representative Adrian Corker and auctioneer Don Fry," Mr Cheetham said.
"It was great to see a big crowd and was definitely 'standing room only'.
"Seeing the entire Elders team, including representatives from the Kojonup branch, stud stock and livestock agents all working together on the day was a real highlight for us in 2020."
Mr Cheetham said the price achieved for Maybenup certainly got the attention of buyers and sellers at Kojonup and surrounding areas.
"It got plenty of people thinking about future plans and started some conversations about developing strategies as the best way to buy or sell in the current market," he said.
The iconic and historical, premium farming property Koobabbie, Coorow, was sold for the first time since it was selected by the Rudduck family in 1906, through RWRWA.
The Birch family, Catalina Farms, Coorow, was the proud purchaser of vendor Wendy Le Get's (nee Rudduck) treasured family property, covering 4461.8ha.
Catalina Farms managing director and prominent industry figure Rod Birch said it was a once in a lifetime opportunity to acquire a property of Koobabbie's calibre.
"I have the highest respect for the work the family has done over the past 114 years since original selection," Mr Birch said in November.
"We are very pleased to have purchased the property as a whole as we wished to keep it together to retain the history of the legacy that the previous owners have set."
Selling agent Mr Wilding said he was grateful for the opportunity to list and sell such an iconic property.
"For our company, it's wonderful to have the support from these high-profile properties and hopefully that has proven to the market that we are confident in what we do," he said.
Mr Wilding said the sale of Koobabbie set a new price benchmark for the area by about 30pc.
Australia's wealthiest woman, Gina Rinehart, Hancock Agriculture, confirmed she will be divesting "several" properties from her company's vast agricultural portfolio in November.
However the company did not confirm which properties or how many would be offered, although WA's Ruby Downs, in the Kimberley is rumoured to be one.
Elders' Mr Cheetham said 2020 was a very strong year for the company, with impressive growth year-on-year for both rural and residential sales.
He said there was a vast amount of land under contract due to settle in 2021 and the company was eager to list more properties in the coming weeks.
"It's no secret the market is very strong and record prices are being achieved across the State," he said.
"We have qualified buyers running the ruler over what farms are currently on the market and many of them are wishing they had more options in particular areas.
"We're seeing farmers prepared to buy land in completely different areas to where they are currently based, sometimes to set up a son or daughter with a standalone operation and sometimes to spread risk by buying a satellite farm in a higher rainfall area or a larger property with scale in a lower rainfall area.
"Farmers are really thinking outside the box when it comes to the best way for their business to expand and there are some really good properties currently on the market."
Elders began 2020 with the successful auction of Lauderdale, Boyup Brook.
The 552ha sheep farm was purchased by neighbouring farmers the Robertson family for $2.75m, equalling $4982/ha.
Elders continued on its trajectory of successful sales with two separate parcels at Kukerin achieving record prices for the region.
Paddy's North, of 150.75ha or 137.6ha arable, sold for $400,000 to the Watkins family, Kukerin.
The sale equalled $2653/ha or $2907 per arable hectare.
Paddy's South, of 113.36ha or 110ha arable, sold for $435,000 to Grant Lukins and Jamie Gray, Kukerin.
This deal equated to $3837/ha or $3955 per arable hectare.
Malaysian-owned company KLK Farms Pty Ltd was revealed as the buyer of a 1148ha Badgingarra property.
Marketed as a ''jewel in the crown', the property sold for around $6m.
The purchase increased KLK's Australian agricultural land investments, which are all in WA, to 58,555ha.
A large dairy in the South West was purchased by a New Zealand investor with the intention to utilise it for horticulture.
Known as Dunmore, Scott River, the 1181ha farm was marketed for $8m bare.
The buyer, who also purchased an adjoining blue gum tree farm of 501ha, paid about $11m for the two properties.
In what could be called 'a year of auctions' for Elders but also the industry, Mr Cheetham said 2020 had been one the company's more successful years in recent times in terms of auctions.
"Auctions possibly fell out of favour six or seven years ago when the market wasn't as buoyant, however there are a lot of advantages to auction, particularly with the current level of competition from buyers," he said.
"I see it as the truest and fairest way to determine market value.
"Sale by auction isn't always the best option though, and a good real estate agent will guide sellers through the various methods of sale to determine if auction is the right strategy for their particular property."
Reflecting on 2020, RWRWA's Mr Wilding said it "has been a very good year for our business".
He said a lack of listings had been the biggest constraint.
"There is much more demand than there is supply, which to me suggests that agriculture is in high demand across Western Australia, and broader Australia, for both farmland and pastoral properties," Mr Wilding said.
"Most of the properties we have had on the books have sold, so we are seeking more listings to continue on with the demand that we are achieving."
He said it's very likely that more properties would be under contract early next year.
Another notable sale for RWRWA was one that saw local family farmers paying top price for a quality property which was a common theme throughout 2020, with the sale of Cloverbrook, Wandering, an early example.
A family from Williams paid $15.4m for the 2626ha farm, equating to $5864/ha or $7436 per arable hectare.
In terms of 2021's outlook Mr Ness, RWRWA, expected the WA market to continue to tighten with fewer transactions occurring.
"This has been a common thread for some time now," Mr Ness said.
"If however we have some jitters about our commodity prices then it might just make a few owners who are close to retirement age bringing that decision forward a little."
Mr Ness said if seasonal conditions were favourable, then the market should stay strong.
"However many of our major commodities are under pressure and if it wasn't for the restocking of the Eastern States, then red meat prices would also be suffering like wool," Mr Ness said.
"It's really hard to predict to be honest, there is a hiatus in sales from May to August and anything can happen during that time to reset the market.
"If you're happy to sell now why wait for the next selling season as it could be very different."
Nutrien Harcourts' Mr McTaggart said 2020 has been a very good year for the group, as it has continued to see high demand from local farmers and recently interest has increased from Eastern States' buyers.
"Nearly every sale that Nutrien Harcourts WA has transacted over the last half of 2020 have set new price records for their respective districts from Esperance in the south to Northampton in the north," he said.
Mr McTaggart said farmland in WA appealed to buyers from the Eastern States as it represented good value for money.
"If we look at the comparison between Horsham in Victoria with land equating out at $8-$10 per millimetre of annual rainfall, compared to Condingup in Esperance at $5.20-$6.20/mm of annual rainfall, there is still plenty of upside in the WA market in the higher rainfall regions," he said.
"Another interesting comparison shows up in the more medium rainfall regions where it appears that the WA values are beginning to catch up with Eastern States' levels.
"A comparison between Karoonda in South Australia coming in at around $3.50-$4.10/mm of annual rainfall, with Kerang in Victoria at $4.60-$5.20/mm of annual rainfall and in WA at Wongan Hills coming in at about $3.60-$4.20/mm of annual rainfall."
Mr McTaggart recalled that demand for WA agricultural land had been across the board for all enterprises, including cropping, grazing and horticulture properties.
Looking to 2021, he predicts property values to remain strong given low interest rates, the shortage of land for sale and increasing demand from the Eastern States.
"With values for all rural property classes remaining strong, it will also provide the opportunity for farmers who are looking at retirement or relocation to achieve good values for their asset sales," Mr McTaggart said.
A record for the Esperance region was achieved by Nutrien Harcourts WA with the sale of Kimberley Downs, Dalyup.
Purchased by a local farming family, the property measured 1951ha, with 1609ha being arable.
The sale price could still not be disclosed as the property doesn't settle until March, 2021.
Nutrien Harcourts WA set another district record per hectare in 2021, this time in Kojonup with the auction of Karinya in October.
The property was purchased by a high-profile local individual in the region for $4.4m, equating to $6085/ha or $8772 per arable hectare.
Nutrien Harcourts WA rounded out 2020 with two successful auctions.
Kuranda, Moodiarrup, was offered in two separate parcels and sold to two neighbouring families.
The Kuranda home farm of 614.7ha was purchased by the Lloyd family, Boyup Brook, for $2m.
The price equalled $3254/ha or $5830 per arable hectare.
Eulin Block, located five kilometres away from the home farm, was bought by Mokup farmers the Ainsworth and Calais families for $1,575,000.
This sale equated to $5654/ha or $7797 per arable hectare.
The premium property Talga, Toodyay, was listed on behalf of vendor Wildcross, through Nutrien Harcourts WA.
Talga has links to WA live export pioneers Graham Daws and Mike Stanton.
Mr Stanton and Mr Daws own International Livestock Exports (ILE), which Talga provides fodder to.
Wildcross is a major shareholder of ILE.
The property was expected to fetch up to $14m.
Ray White Rural Albany had two successful auctions in 2020.
South Kybellup Farm, Frankland River, of 1179.52ha sold for $2m or $1696/ha to neighbouring farmers Peter and Sharon Beech.
Takenup Tree Farm, Napier, spanning 206.7ha was bought by local man Thomas Brough, who paid $1m or $4838/ha for the property.
2020 demonstrated the strength of the WA property market.
Compared to other property classes, the rural sector showed its resilience in times of global economic downturn and great uncertainty.
Although international demand was slowed, local demand more than filled the gap, with family operations paying top dollar for properties time and time again.
Going into 2021, the market looks to be in a strong position, with all eyes on whether land values will increase, stabilise or in a less likely scenario, ease.
