Agricultural land shows significant growth

Driven by strong commodity prices and increasing land values, the agricultural property sector has experienced significant growth over the last decade, and in comparison with other property sectors, has performed extremely well during the economic downturn. There is real value within the agricultural sector at the moment, and as a result, market activity and overall sentiment is expected to continue improving within coming months.

Over the last year, prices for cattle and sheep farms have stabilised, tractor sales have increased by 35% on a month to month basis, and game and irrigation farms in particular, have continued to show impressive growth due to high commodity prices.

An upward trend currently influencing the sector has been a changing buyer demographic, with a greater number of African farmers entering the property market. Another factor bolstering demand has been a dramatic increase in the prices of rare game species over the last 6 months, which has in turn, augmented demand for farms suited to breeding.

A further nascent trend within the sector has been the introduction of more advanced drainage systems into farms. With the past three years being characterised by unusual rainfall patterns and resultant poor harvests, this practice has been highly advantageous for farmers.

As with all property, position is an important factor when purchasing agricultural property, but I maintain that the more important factors to consider are the amenities that the farms offer. Whilst location is a key consideration when purchasing agricultural land, investors need to take into account a host of factors including the topography, size, improvements, security, water and soils of a property.

The choice of region is also important. Although there seems to be an increase in the number of buyers moving from the northern regions to the Western Cape, the Free State and Northern Cape thrived during the economic decline, with above-average crops being delivered and the prices of all green crops being higher than average.

Specifically it is the crop farms (sugar and maize), extensive grazing farms, irrigation farms and game farms that are leading the way in the current market. The outlook for the sector remains positive, and whilst input costs have drastically increased, grain prices are very high and conditions for record harvests remain favourable factors which are fuelling confidence in the medium term.

The competitive and fast-paced atmosphere of auctions continues to present both buyers and sellers with an effective platform through which they are able to acquire prime agricultural properties, livestock and implements at market-related prices.