Opportunities for rural property investors

An improved outlook for key agricultural commodities is creating property investment opportunities, both for rural investors and within regional centres.

The value of Australian exports of dairy products alone is forecast to rise by 14 per cent in 2014-15 to $3.4 billion, according to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES). Experts predict this and other factors will stimulate rural and agribusiness investment over the short to medium term.

Portfolio Management Services managing director Jock Bing said property investment inquiries from rural investors were up.

“For many people who work with the land, property is a traditional and well-understood investment,” Mr Bing said. “Its cycles of supply and demand, its secure underlying land component and its long-term nature are easily appreciated.”

“Steady incomes and reliable capital growth are also very welcome characteristics, helping to offset more unpredictable incomes during the years for many farmers and growers.”

Mr Bing said low interest rates, including fixed rates at around 5 per cent, looked set to coincide with a strong profit season.

“At the same time, property prices are in somewhat of a hiatus. Limited price growth in the immediate, short term is providing us with a strong negotiating point when we are buying for our clients.”

It comes as ABARES predicts continued strong demand for Australian dairy products from Asia, the Middle East and North Africa throughout 2014-15. The farmgate price of milk is expected to rise about 5 per cent and milk production is tipped to rise 2 per cent.

In March the bureau predicted average farm cash income for dairy farms would rise in 2013-14 to $129,000, an increase of about 190 per cent. It also predicted growing global demand for cotton and wool would support world prices and Australian production levels; demand for grains and oilseeds would also keep prices relatively high.

Farm export earnings reached an estimated $41 billion in 2013-14. ABARES expects returns in 2014-15 to ease from those levels, but to remain about 9 per cent above the 10-year average to 2012-13.

The positive outlook was echoed in Colliers International’s Rural & Agribusiness Research and Forecast report 2014, which says the improved fortunes of the agriculture industry are a result of an improving global economy and improved availability of finance.

For more information on the latest property investment opportunities, call Portfolio Management Services on (03) 9621 1044.