Buyerinterest remains strong for horticultural properties across New Zealand with syndicates,corporates, existing operators and new entrants to the market all seeking outopportunities, according to the latest Bayleys’ Rural Market Update for thehorticulture sector.
Compiledby its Insights & Data team, the report also said there has been noticeablegrowth in buyers driven by a change in lifestyle, attracted by the ability tooutsource part or all of a horticultural operation enabling a reasonablypassive income stream.
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NickHawken, Bayleys’ national director rural said REINZ data showed 2,585 hectaresof horticultural land was sold in the 2021/2022 financial year, with a broadspread of values ranging from an average of $178,000 - $727,000 per hectare.
“Ananalysis of Bayleys’ transactional data shows a significant lift in cross-sectorbuyers in the chase for returns.
“Adistinct two-tier market has emerged, with syndicates and corporates willing topay for scale and focusing on larger production blocks generally above sixcanopy hectares, and creating a value gap relative to those smaller blocks.
“Meanwhile,heavyweight grower, distributor, marketer, and exporter of fresh produce T&GGlobal, has sold two orchards and a post-harvest facility to New ZealandSuperannuation Fund’s rural investment manager, FarmRight which further showsthe wide range and depth of investor interest in the horticultural propertysector.”
Hawkensaid like the dairy sector, investment entities are scoping out horticultureproperty opportunities that can leverage off “the New Zealand Inc.” narrativeand the relatively systemised nature of investment in the two sectors.
“High-performanceagriculture and horticultural assets that play into the hands of rising globalconsumer demand and preferences for New Zealand produce are realising a premiumin the current market.
“It’sa story of returns, with growth being seen across the primary horticulturalsectors but with kiwifruit the hero.
“Thanksto strong market returns, and possibly to a certain extent license scarcity,kiwifruit orchards dominate the horticultural property picture with establishedG3 Sungold orchards selling for $2.0 million per canopy hectare.”
Hawkensaid the scarcity of coveted G3 Sungold licences, the restriction of totalhectares an individual can retain, and record tender prices for new licenses, arein essence designed to help protect orchard gate returns (OGR) in the longerterm.
“Whetherwe’ve seen the peak for kiwifruit prices or if the strong run continues,remains to be seen.
“Higheroperational costs, labour challenges and growing inflationary pressure all needto be considered here, however returns for varieties like Hayward Green and thenew Ruby Red are expected to benefit from the market access created by G3SunGold expansion.”
Othersegments of the horticulture sector – like apples – have seen the pandemic’slong tail continuing to disrupt some markets and supply chains, while rising on-orchardcosts, a tight labour market and adverse weather events are squeezing orchardgate returns.
“Representativeorganisation for the New Zealand pipfruit industry, NZ Apples & Pears Inc.reports that the recently completed apple harvest is likely to be down morethan a previous estimate of 12 percent with staff shortages at harvest time andadverse weather events all taking their toll, “ said Hawken.
“Likewise,suppressed OGR for avocados in recent seasons demonstrates the cyclical natureof commodities, but the improved return forecast for the coming season suggestsrecovery is likely.
“Lookingahead, New Zealand’s free trade agreement negotiations with the European Unionare expected to benefit horticulture – particularly kiwifruit, onions, and apples– as tariff-free conditions are put in place.”
Hawkensaid there will be opportunity across the wider horticulture sector tospringboard off the confidence being shown globally for New Zealand produce andoff strong domestic demand for fresh fruit and vegetables.
“Turnersand Growers (T&G) have identified berries and table grapes as two emergingproduce categories and I am certain other segments of the market are ripe forfurther exploration.
“Andas with other primary sectors where carbon-related compliance is showing itshand, T&G recently signed the country’s first Sustainability-Linked Loan inthe horticulture sector, committing to ambitious targets to decarbonise itsbusiness.
“Thispoints to opportunity for other horticultural landholders to reposition theiroperations in a changing world, and to evolve their sustainability models inline with bank lenders’ expectations for target-driven objectives whenconsidering loans.”
ForBayleys full rural insight horticulture market sector report seebayleys.co.nz/insightsanddata/rural
