Wealthy Waikato farmers stonewall 'foreign' ownership

Waikato dairying and grazing blocks going on the market for sale are remaining under the ownership of ‘local’ farmers who are far better financially resourced than their counterparts from other New Zealand provinces, according to the latest batch of rural real estate sales data.

Leading agency Bayleys has sold 11 of the 15 diary and grazing farms in the region to have gone under the auctioneer’s hammer over the past two months - with Waikato farmers outbidding hopefuls from Taranaki, Hawke’s Bay, Northland, Southland, and the Bay of Plenty on every occasion.

Bayleys Waikato country manager Mark Dawe said that while ‘out of town’ bidders were active on many of the farms going up for auction, they simply couldn’t foot it financially with the ‘local boys’, in what has been the busiest quarterly sales period since 2007… even with another month of selling days left.

"The value being achieved for highly-productive rural land in the Waikato is now far ahead of the rest of New Zealand," Mr Dawe said. "It’s like comparing the Auckland residential property market to the rest of the country - there’s us, then there’s the rest…. with a big gap in between.

"The per hectare sales value for the Waikato farms which have gone under the hammer over the past two months varies greatly from property to property - based on location, infrastructure, and type of farm. Of those factors though, location is probably biggest determination - with access to water being an important part of that," he said.

"Our data shows most of the successful buyers already owned farms in the Waikato, with half of the grazing blocks purchased by farmers who had sold up their bigger dairying operations but who wanted to remain both in the province and in the dairy support sector.

"Among those who bought the dairying units, 90 percent have leveraged their way into the market by borrowing, albeit at relatively low debt-to-equity ratios. From the feedback we are getting, they have calculated milk sold payouts in the high $5 range with a US $ cross-rate in the high 70s to low 80s.

"Obviously any movement up in the Fonterra payout or down on the NZ$ only adds to higher revenues."

Mr Dawe said the sales data reflected there was particularly strong buyer demand for dairying units in the $3million to $6 million bracket, while support blocks were well supported in the $1 million to $1.7 million range.

Among the properties sold at auction by Bayleys Waikato since the beginning of October are:

369 Kereone Road Morrinsville - a 112.8820 hectare dairy farm which sold under the hammer for $8.45 million

671 State Highway 31, Otorohanga - a 186 hectare dairy farm which sold under the hammer for $5.3 million

1142 Hetherington Road, Huntly - a 163 hectare dairy farm which sold under the hammer for $4 million

139 Taylor Road, Hamilton - 51.6520 hectare dairy which sold under the hammer for $3.3 million

81 Mcwatt Road, Maramarua - a 116ha dairy unit which sold under the hammer for $3.3 million

401 Front Miranda Road, Waitakaruru - an 87 hectare dairy farm which sold under the hammer for $3.175 million

2234 Maungatautari Road, Maungatautari - a 25 hectare grazing block which sold under hammer for $1.8 million

787 State Highway 26 Newstead, Hamilton - a 20.3061 hectare grazing block which sold under the hammer for $1.505 million

116 Bowman Road, Hamilton - a 30 hectare grazing block which-sold under the hammer for $1.4 million

Komata Reefs Road, Paeroa - a 200 hectare grazing block which sold under the hammer for $1 million

and

1263 Kaihere Road, Kaihere - a 17 hectare grazing block which sold under the hammer for $740,000.

Mr Dawe said that while farm values were fairly static compared to the same period last year, the number of farms being sold was up 30 percent, while the average number of bidders per auction was up from 3.7 to 4.2.

"That shows that there is still strong support for dairying and dairy-support property although it looks like any inflationary additions in the valuation process have been nullified by a reduction in forecast revenues from dropping milk solid pay-outs," Mr Dawe said.