A leading agribusiness lawyer says the recent $20m sale of Mt. Elephant Station in the Western Districts of Victoria offers good news for investment in Australian agricultural land.
The deal is a clear sign that the fundamentals underpinning investment in Australian agricultural land had not shifted because of the GFC, said the head of Piper Alderman’s Agribusiness Practice Group, Simon Venus.
According to Venus, the firm’s agribusiness group had acted for the purchaser of Mt. Elephant Station, a landmark holding near Derrinallum in Victoria, for the last 10 years on building a portfolio of agricultural assets across Australia to compliment their global farming operations.
Mt. Elephant Station is reportedly the largest value rural property sale in Victoria since 2008. The vendor is the Melbourne-based Ballieu family.
Charles Bagot, the Piper Alderman partner who handled the sale, said that underlying the approach of foreign investors was the now well-understood view that the supply of good agricultural land is finite while the demand worldwide, but particularly in Asia, for quality food stuffs, is increasing.
This will inevitably drive up the value of good agricultural land. He added that investors are increasingly active in reviewing and improving their exposures to Australian agricultural land.
Foreign investors aren’t alone in weighing into acquisitions - Venus says that he has domestic clients looking at quality assets, including distressed sales emanating from receiverships which represented a compelling investment proposition for those with strong balance sheets.
Venus also said that he saw the food security issue continuing to drive interest in Australian rural land and agribusinesses and pointed to his group’s involvement in several recent large scale horticultural enterprises, including a 130 hectare pomegranate orchard and production enterprise and advice on a $100m glasshouse tomato project.
“These types of projects indicate that the fundamentals have not changed, food security and access to quality arable land for food production will continue to drive investment, despite the vagaries of seasonal events”.
The well-watered, 3310 hectare Mt Elephant Station represents some of the best agricultural land in the state and has been farmed with a mix of stud and commercial livestock and cereal production. The property was purchased on a walk-in-walk-out basis.
Venus said: “Our client is an experienced investor in agricultural land and agribusinesses across the world and has taken an educated, long-term view on opportunities in the agribusiness sector”.
He said this included broad acre farming, horticultural, orchard and livestock operations in places as diverse as California, Romania, New Zealand and Argentina.
“Our experience with foreign clients is that they are patient when deploying capital for agricultural projects and have a sophisticated understanding of agricultural risk. Prime holdings such as Mt. Elephant are a good fit with a high calibre international portfolio.”