Southland Dairy Farm Sales | June 2019

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The number of Southland dairy farms sold to date since the beginning of 2019 has remained relatively consistent to that of the previous two years. We have noticed however that the composition of these sales has changed, with more A class properties having transacted since the start of the year, albeit generally at a level lower than what we would have expected two years ago. This reflects that there has been a reset in vendor expectations of sale price.

Farmer optimism in the dairy sector started relatively positively for the 2018/19 season, despite the prior 2017/18 season having its share of setbacks. We are observing that potential purchasers are now preparing their offers based upon an expected cash return, rather than future capital growth and market appreciation. We have also noticed the increase in equity partnerships being formed as a way to raise capital to purchase properties. 

Overall, we consider one of the key influences on which way the market will be led in the coming months is going to be the level of liquidity in the market and the flow of capital due to transactions (or lack of) occurring. 

As it stands, with foreign investment constrained for the foreseeable future and banks sending a clear signal to their dairy client’s that further consolidation is required, we believe liquidity in the market will remain tight. The fundamental conditions for optimism in the market do exist, i.e. the dairy payout is looking generally more positive and interest rates are remaining low, however continued cautious sentiment suggests it is difficult to see dairy farm values recovering in the short to medium term.  

The graph below identifies the analysed effective land value per hectare of ‘A’, ‘B’ and ‘C’ class properties in the region since the beginning of 2015, together with key external influences. ‘A’ class farms are typically situated in the Central Southland locality or the area to the east of Invercargill, on flat land with good soils and have a good standard of buildings, farm infrastructure and improvements.

Analysed Southland Dairy Sales 20152019

Dairy Southland map image

Southland Dairy Farm Sales | June 2019

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Kate Day

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Kate completed her B. Com. Ag majoring in Agricultural Management and Rural Valuation from Lincoln University in 2015.

Growing up on an extensive sheep and beef property in Southland has given Kate invaluable hands on experience and understanding of the primary sector. Kate has always had a passion for property and the rural sector  and is now working towards becoming a fully registered valuer.

Kate began working as  Research Analyst at the Colliers Rural Valuation division in Christchurch in 2016.

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Ed Percy

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Ed has over 20 years’ experience in property valuation and agribusiness throughout New Zealand. He is based in Christchurch and travels regularly to the regions. Prior to joining the Colliers International Rural and Agribusiness valuation team he was a senior valuer and business manager of a valuation firm in Central Otago which covered the lower South Island and spent four years as a farm manager on a sheep and beef farm in the Wakatipu Basin. Ed has also practiced as a valuer in Nelson/Tasman, Wellington and the Wairarapa.

Ed has agricultural and forestry interests in the lower North Island, completed the Kellogs Rural Leadership Programme in 2010 and obtained a Master of Property Studies degree in 2015. He has broad property related experience in both urban and rural sectors focusing more recently on specialized rural and commercial assets and the impact of nutrient regulation on land values.

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