While some property sectors may be experiencing a tough time, the agricultural sector is reportedly booming thanks to the new wave of buyers.
Levitt explains that an upward trend influencing the agricultural sector has been a changing buyer demographic, with a greater number of African farmers entering the property market.
According to Auction Alliance, driven by strong commodity prices and increasing land values, the agricultural property sector has experienced significant growth over the last decade.
When compared with other property sectors, it has performed extremely well during the economic downturn.
“There is real value within the agricultural sector at the moment as result, market activity and overall sentiment is expected to continue improving within coming months”, says Rael Levitt, chief executive officer of Auction Alliance.
Levitt says in 2010, prices for cattle and sheep farms have stabilised, tractor sales have increased by 35 percent on a month to month basis, and game and irrigation farms have continued to show impressive growth due to high commodity prices.
He says currently, there are a number of first-rate agricultural properties coming onto the auction floors.
Auctions have been widely used means of agricultural property sales and acquisition for several years and therefore, buyers and sellers of agricultural properties not only understand the auction process but are comfortable with auctions, he says.
Levitt explains that an upward trend influencing the agricultural 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 six months which has in turn, augmented demand for farms suited to breeding.”
He says the introduction of more advanced drainage systems into farms has increased investor appetite in buying agricultural properties.
With the past three years being characterised by unusual rainfall patterns and resultant poor harvests, this practice has been highly advantageous for farmers.
Buyers are said to be acquiring crop farms (sugar and maize), extensive grazing farms, irrigation farms and game farms which are sought-after in the current market.
While location remains vital when buying property, he says the more important factors to consider when buying agricultural property include the amenities that the farms offer.
Investors need to consider things such as topography, size, improvements, security, water and soils of a property and choice of region remains important too.
He says 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.
Buyers are said to be acquiring crop farms (sugar and maize), extensive grazing farms, irrigation farms and game farms which are sought-after in the current market.
“The agricultural sector remains positive and while 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,” he says.
He adds that 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. - Denise Mhlanga
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