Horticulture Market Update
In this sector market update, we focus on the horticulture sector with insight on market conditions from Bayleys Bay of Plenty Country Manager, Matt Clutterbuck.
Strong market returns beyond the orchard gate continue to drive demand for horticultural property from buyers, with vendors benefitting from improved capital returns.
There has been no shortage of demand for property coming from syndicates, existing growers and new entrants to the market, and in the last 12 months we have continued to see prices exceed market expectations, particularly for Gold and Green kiwifruit orchards.
With the recent announcements from Zespri indicating to the market that it would be halving its Gold licence offering in 2022 to just 350 hectares, growers are carefully considering their options.
The early start for kiwifruit out of Gisborne continues to drive buyer enquiry from those who have been squeezed out of the Bay of Plenty market, where access to land at the right altitude becomes more scarce.
Often, the benefits of the early start of the Gisborne region outweigh additional logistic and pack-out costs, making it a very viable alternative to the Bay of Plenty.
There has been a slow-down in the sale of avocado orchards, particularly in the Far North, as the industry grapples with compressed returns this year.
Exposure to volatility of commodity prices is a reality that all sectors in the rural real estate market face, and unfortunately for avocados, 2021 has not been its year.
According to the Real Estate Institute of New Zealand, for the 12 months to 30 September 2021, there were approximately 26 percent more orchards marketed and sold compared to the previous period, and a greater number of smaller properties were sold, as the total hectares transacted reduced by 19 percent.
On the ground we are seeing more liquidity in the kiwifruit market, primarily driven by those corporate syndicates searching for scaled opportunities.
While buyers are continuing to search for development blocks, there is no substitute for quality, hence established properties with a sound track record of production and orchard gate returns will lead the value of the market.
Read more...
[Download PDF]Subscribe to receive the latest rural news and insights from Bayleys’ Rural Insight.