Welcome to a new podcast brought to you by Property Brokers and powered by The Country. In Episode Two of Land and Lifestyle Property Markets, Jess Davidson discusses with Property Brokers Rural General Manager Conrad Wilkshire, some of the current trends, sector insights, and the future long-term outlook for the Rural Property Market.
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Speaker 1 (00:01):
Land and Lifestyle Market Insights on the Country with Property Brokers.
Speaker 2 (00:08):
Welcome to Land and Lifestyle Market Insights for the Country,
proudly brought to you by Property Brokers. I'm Jess Davidson
and in this episode we look at the rural property market.
We're joined by Conrad Wilkshire, Rural general manager at Property Brokers. Hey, Conrad,
how are you good?
Speaker 3 (00:24):
Yes?
Speaker 4 (00:25):
And good to be back on the show. Yeah.
Speaker 2 (00:26):
And of course last episode we spoke about the positivity
around the property market. Has that continued and what are
you seeing Conrad?
Speaker 3 (00:35):
It certainly has.
Speaker 4 (00:36):
If fire wears to zeron on the dairy market particularly,
it's exceptionally strong. But if I look at it generally speaking,
just to share our numbers, it's probably the appropriate place
to start over this county year. Jeez, we'd done twelve
transactions ten million or more and in fact five of
those transactions are over twenty million, So you know, we're
(00:58):
seeing a level of business activity the operating at levels
in terms of weight of money, at levels we haven't
seen for a very long time. And notably I think
just as that only two of those twelve transactions were
non dairy.
Speaker 3 (01:14):
Wow.
Speaker 2 (01:14):
Okay, So obviously we're going to see that positively flow
on through through the year that you'd expect. What's driving
that sentiment, Conrad.
Speaker 4 (01:23):
Well, I think there's two elements to that. You've got
a very strong dairy market and that's and we've spoken
about that previously, So that's that's coming pretty self evident,
and it's well supported by the banking sector.
Speaker 3 (01:41):
And so there's a.
Speaker 4 (01:42):
Strong debt mark at the that's operating on sensible levels
and the bigger operations are operating at their level. And
I think just probably giving an explanation that jess if
I looked at two hundred hicta dairy operations, which is
starting to get large in scale across New Zealand. For
this calendar year, there'll be about fifty of the one
(02:05):
hundred and fifty odd farms this year to date calendar
year now, now that's about a third of all dairy farms.
So that's again scale has been quite difficult to sell
scale dairy properties in recent times, whereas that's certainly not
the case. And if you look at the South Island
in terms of scale, not talking about the value of
(02:26):
the farm, but the scale of them, over seventy percent
of the South Island dairy farms two hundred hecties or
more well, and they're.
Speaker 3 (02:33):
Not at the sort of record prices have.
Speaker 4 (02:35):
Been quoted it lately, but a lot of them are
large scale dairy properties, not necessarily all in the dress
circle locations, but they are very well run, economic dairy properties,
and they're attracting interests both domestically and further afield.
Speaker 2 (02:50):
Well, we want to talk about that. We'll hone in
on some of those aspects as we get through the
check Conrad. But foreign ownership it can be a little
bit of a negli topic at times. What are the
pros and cons around foreign investments?
Speaker 4 (03:03):
Soonly a political question and often the first reaction isn't
always a positive one because that people feel that.
Speaker 3 (03:09):
The assets are being lost for New Zealand. When you
look at the reality of all that, it's.
Speaker 4 (03:14):
Probably nothing can be further from the truth, because a
lot of these assets come back onto the market and
often their investment mandates aren't one hundred year type family type,
dynasty type mandates.
Speaker 3 (03:26):
They are often.
Speaker 4 (03:26):
Seventy ten years when you acualize it. They typically take
assets that have been underinvested and to meet the criteria
have to reinvest it. They made a significant rate at
a rate that the neighbor probably wouldn't couldn't either afford
to do or want to do, and actually at a
level that actually puts these assets sort of best in
class for that on the source that they are in
(03:47):
the location they are. So what we have seen as
from a dairy point of view, significant investment. But you
look at horticulture and you've seen the investment there which
has both been domestic and international, that they have been
able to link with supply chains, they've been able to
link directly into other markets or achieve diversification outcomes that
(04:10):
probably New Zealand market may just be a little bit
more circumspect about, not so keen to sort of roll
into or take that level of risk. So the way
I also, I think the biggest pro is that we
do need some equity investment in the New Zealand market.
Speaker 3 (04:26):
Not debt.
Speaker 4 (04:27):
If it's just all debt, it can have swings and
roundabouts where you know, I mean, may be a little
bit over leveraged and that sort.
Speaker 3 (04:33):
Of the banks pull back and you end up with
a sort of.
Speaker 4 (04:36):
Period of not a lot of new investment coming forward,
and the esset's become somewhat stranded because there's enough liquidity.
You really want both markets operating. You don't want direct fight.
You need really good controls around that. We have more
than enough controls. And then equally you want to be
able to help balance. So it's not we're not totally
(04:58):
relying on the debt market, which in South has its
own set of problems for the New Zealand market. You know,
if I look at Australia, I reckon they've got the
balance about right. You know, they have a big domestic
market for their culture. But I think the biggest advantage
is that they've been able to diversify a lot of
assets or create new opportunities through through the funds management.
And a lot of that funds management is offshore.
Speaker 2 (05:18):
Yeah, and let us not forget, of course, these farms
still employ New Zealanders, don't they. So it's great across
the board.
Speaker 4 (05:24):
And Australia is they are one of our biggest competitors
in agriculture, so we don't want to get too far
left behind others that we might have. We just can't
rely on our rugby scores too actually to address the issues.
Speaker 2 (05:36):
So this is very true Conrad. And speaking of Ossie
Verse New Zealand, how do these two markets compare. What
are the differences?
Speaker 3 (05:43):
Well, I touched on one before.
Speaker 4 (05:45):
Obviously they have a large domestic market communits in New Zealand,
I mean just about everything reproduced we export, whereas in
Australia they have you know, significant domestic market, but they're
they're bigger exporters too. If I look at dairy again
and simple too, they're about a third of our milk
production and we'd be say we're approximately twenty one billion
(06:07):
leaders of milk because they use leaders over there there'd
be about eight point five and so and so they're
not as their market. Their dairy market isn't as developed
as ours, and they don't have the Fronterra factor in
the mix either and so that so and also our
cost of production in terms of the margins in which we.
Speaker 3 (06:28):
Operate are typically superior as well.
Speaker 4 (06:30):
And again coming back to dairy, so I think on
that on the fars, looking at light for light, there's
a lot of unders and overs when you look at
land values and it's not that comparable. But if I
look at operating margins, I think we are very attractive
for institutional vestment in New Zealand compared to as compared
(06:50):
to Australia, I think we can. I think we can
more than compete on equal footing. It's just at the
moment and it's been very difficult for capital operate until recently.
Speaker 2 (06:59):
What do you say that ours more accessible than Australia
and price.
Speaker 4 (07:03):
I think we look if you are looking at in
tier one assets and central mid Canterbury mid Kenneby particularly,
it's those price points are getting higher now and typically
that's been a keen year of interest. But if you're
looking for large scale really run around Jerry farms at
(07:24):
medium price at say thirty five thousand hectar, if you
go in with that sort of scope, you know there
are a lot of really good large scale assets across
news element would be very attractive to new capital coming in.
And some of those developments are long data now and
need updated irrigation SKIS systems, maybe herringbones converted.
Speaker 3 (07:42):
To road trees and maybe some.
Speaker 4 (07:44):
Further land use options developed as well.
Speaker 3 (07:47):
And I think you know that's where you know investment
capital can really make a difference.
Speaker 2 (07:50):
And given those differences between you seeland in Australia are
Australians now looking towards US for options to buy.
Speaker 4 (07:57):
Yeah, there's definitely. Having been there last week and caught
up with a lot of the funds, there's a real
genuine interest in the New Zealand story and there's no
question about that. The only real question is in idea
ability to navigate obouselya's investment criteria and to get a
successful application through because these are significant. There's significant DD,
(08:20):
there's significant application costs and you know, no, people don't
want to go to the exercise and not have a
reasonable shot at success. And I'm not saying for a
moment those criteria ship change, but it's just getting favorable
outcomes and meeting that benefit to New Zealand test.
Speaker 2 (08:37):
Okay, So manage fund opportunities in New Zealand, where do
those come into play in this market?
Speaker 4 (08:42):
I think it's early days there, but there's genuinely some
keen interest and we have a number of contracts that
had that type of structure and behind it that actively
raising funds to invest in dairy domestically through a manage
unit fund structure. So those options are a pearing centainly
appearing now on the level that we haven't seen for
(09:03):
a long time, and so and I do think the
confidence in the dairy sector, its ability.
Speaker 3 (09:08):
To show a.
Speaker 4 (09:11):
Cash flow, consistent cash flow and a definite level of yield,
and particularly as interest rates start to drop, and the
relative risk reward from farming. And I think also because
there's confidence in sector overall, you know, there's belief in
the liquidity of the asset itself, because you don't want
to invest in anything that you don't think you can
(09:33):
get out of. So I think the one that I'm
not sure about yet is how attractive the equity markets
are as distinct from sort of like a unit fund.
It's closed funds, it's all tied to that investment versus
an equity fund going to the equity markets and capital
(09:53):
raising against that traditional that has often often trades at
a disc out to the tangible value of the air set.
But I believe that that option will peer too. But
if you ask me what's going to drive the market
this season, mostly it will be owner operators and it
(10:15):
will be in the North Island, so many of the
assets and dairy. If I kicks with the dairy themes
today is that that forty to one hundred HECTI is
at that North Island market, that's where you see a
lot of the transactions. And in the South Island you're
still seeing a lot of family offices and that two
hundred hectes plus and so I do see that still driving.
(10:37):
And outside of those just circle locations, we're seeing medium
prices closer to mid thirties to hectia. Then then maybe
some of the headlines, you know, fifty sixty seventy thousand plus.
Speaker 2 (10:52):
And you spoke about a balanced market earlier, Conrad, where
does ditt come into play? That deep driven market and
banks being able to support these purchases.
Speaker 4 (11:01):
Now, I think there's you have to have confidence in
the forward view and that confidence is there, and banks
accordingly are getting the appropriate risk return and they're making
capital available to the sector, and that's I think that's
all favorable on The only flag God raised is that
(11:23):
just been totally reliant on the debt market hasn't served
farming assists and hasn't served daring particularly well in this
last decade. If that's your only option, it can get
a bit sticky. I really think you need to have
to have the market really growing. You need to have
a range of options available for investors to invest and
(11:45):
not rather than just relying on debt alone in those
whel I think having some of these equity and direct
finovsion options I think are helpful because it provides liquidity
in the market and gives people exit strategies.
Speaker 3 (11:58):
Without that, I think it can get stuck.
Speaker 2 (12:00):
Yeah, for sure. And on the equity just covering that
off again quickly, Conrad, is that market flourishing? Is it
alive at the moment?
Speaker 4 (12:09):
I think it's early days. Yeah, I think it's yeah.
I think this season, I would say we are seeing
a genuine interest and they are real contracts in play
at the moment that would support in the answer saying yes,
But it's still by number, the great majority of activity
at the moment is.
Speaker 3 (12:27):
Still family office.
Speaker 4 (12:29):
And and I say family office not to corporate. It's
more larger scal businesses to family saying well, yes, we
want to grow. We're taking the opportunity. There is confidence
in the banking sectors and support these growth aspirations. We
can show a good reternal capital. The one thing I
would say that has or dairy particularly, it hasn't had
(12:54):
the asset growth until this season. That probably it was
that was due to it, and there's been I think
a real hiatus of this last ten years where the
assets just haven't grown relative to the underlying value. And
there's a lot of stored value in these dairy assets,
and both internationally and locally, people are starting to understand
(13:16):
that a lot better. You know, there's there's not just
a payout story. It's actually that these assets really are
producing a quality product on an international stage and.
Speaker 3 (13:27):
Often in premium.
Speaker 4 (13:28):
Categories within its within the product lines. And I just
think we're start to see that sheet home now and
it's not it's that you know, probably overnight success takes
about ten years.
Speaker 2 (13:43):
I think.
Speaker 4 (13:44):
I think our dairy story has been solid for a
long time, but it's it's now just getting it's just
getting the realizations there that long term it's it's a
solid bit. It's it's always has been and there's nothing
new in that, but it has been a long time.
Betwo drinks if you like, in terms of actually seeing
some of these assets really achieving for valuation, because certainly
(14:06):
cash flow should drive the underlying business, but you are
also wanting to invest in something that's going to grow.
Speaker 3 (14:12):
On value over time. You don't deliberately invest in something
that's just going to stay flat for ten years.
Speaker 2 (14:16):
Yeah, And I guess that's where that comes back to
that word again, confidence, doesn't it, Conrad. For so long
farmers were riding a wave and hoping things would stay solid.
But now they've got that confidence to go forward with it.
Speaker 4 (14:29):
Yes, indeed. And I think what it was to say
is that these when I say Tier two assets, and
sometimes the source may not be quite the olliver of
source that you see close to the town boundary sometimes,
or they may be a bit further out from town,
but they're actually they are on good source, but they're
just an hour out from town, and sometimes the tracting
(14:50):
labor and a few of those things can take a
little bit of working through, but they are I think,
really good value and they show an excellent return on capital.
I think that's where you're going to see that market
operate more, you know, the Tier one as it's always.
Speaker 3 (15:07):
Always available to.
Speaker 4 (15:09):
The market, and there's always a market, particularly if they're
not large in scale one hundred hectes or something, and
they will be snapped up.
Speaker 2 (15:15):
Yeah, exactly. And it's just so good, Conrad, to be
having such a positive conversation around both islands. As well.
Speaker 4 (15:23):
Yes, absolutely, and I'm talking book both islands when I
say that, Yeah, I really believe that there will be
those opportunities present in the market.
Speaker 3 (15:29):
You know, I'd argue some of them out there already.
Speaker 2 (15:31):
Yeah, and so the key message still, Conrad, now is
a good time to get into the market if you
haven't already.
Speaker 4 (15:37):
Well, certainly for those who want to take a five
to ten year view and I'm looking to set themselves up,
I don't believe deferring that and you're really ready to
run on those objectives, I don't believe setting it out
for another couple of seasons is going to help you
get on the ladder.
Speaker 3 (15:55):
I really do think for.
Speaker 4 (15:57):
Those who have got an ambition to own their own
property and or to grow the base that they've got,
the settings.
Speaker 3 (16:03):
Now is a favorables we've seen in a very long time.
The rest of it comes down to hard work and ambition.
Speaker 2 (16:08):
Well, it sounds very positive and it's wonderful to chat
with a man with so much expertise. Conrad. Thank you
so much for your time, No doubt you're a busy man.
We'll let you get back to it.
Speaker 3 (16:17):
We're always in and no gratefulbous.
Speaker 2 (16:19):
And have a talk brilliant. That's Conrad Wilkshire, Rural General
Manager at Property Brokers. If you're wanting further information, you
can visit property brokers, dot co, dot inzaid Forward, slash
leand and Lifestyle
Speaker 1 (16:33):
Land and Lifestyle market insights on the country with Property
Brokers Bound
Land and Lifestyle Market Insights on the Country with Property Brokers.
Speaker 2 (00:08):
Welcome to Land and Lifestyle Market Insights for the Country,
proudly brought to you by Property Brokers. I'm Jess Davidson
and in this episode we look at the rural property market.
We're joined by Conrad Wilkshire, Rural general manager at Property Brokers. Hey, Conrad,
how are you good?
Speaker 3 (00:24):
Yes?
Speaker 4 (00:25):
And good to be back on the show. Yeah.
Speaker 2 (00:26):
And of course last episode we spoke about the positivity
around the property market. Has that continued and what are
you seeing Conrad?
Speaker 3 (00:35):
It certainly has.
Speaker 4 (00:36):
If fire wears to zeron on the dairy market particularly,
it's exceptionally strong. But if I look at it generally speaking,
just to share our numbers, it's probably the appropriate place
to start over this county year. Jeez, we'd done twelve
transactions ten million or more and in fact five of
those transactions are over twenty million, So you know, we're
(00:58):
seeing a level of business activity the operating at levels
in terms of weight of money, at levels we haven't
seen for a very long time. And notably I think
just as that only two of those twelve transactions were
non dairy.
Speaker 3 (01:14):
Wow.
Speaker 2 (01:14):
Okay, So obviously we're going to see that positively flow
on through through the year that you'd expect. What's driving
that sentiment, Conrad.
Speaker 4 (01:23):
Well, I think there's two elements to that. You've got
a very strong dairy market and that's and we've spoken
about that previously, So that's that's coming pretty self evident,
and it's well supported by the banking sector.
Speaker 3 (01:41):
And so there's a.
Speaker 4 (01:42):
Strong debt mark at the that's operating on sensible levels
and the bigger operations are operating at their level. And
I think just probably giving an explanation that jess if
I looked at two hundred hicta dairy operations, which is
starting to get large in scale across New Zealand. For
this calendar year, there'll be about fifty of the one
(02:05):
hundred and fifty odd farms this year to date calendar
year now, now that's about a third of all dairy farms.
So that's again scale has been quite difficult to sell
scale dairy properties in recent times, whereas that's certainly not
the case. And if you look at the South Island
in terms of scale, not talking about the value of
(02:26):
the farm, but the scale of them, over seventy percent
of the South Island dairy farms two hundred hecties or
more well, and they're.
Speaker 3 (02:33):
Not at the sort of record prices have.
Speaker 4 (02:35):
Been quoted it lately, but a lot of them are
large scale dairy properties, not necessarily all in the dress
circle locations, but they are very well run, economic dairy properties,
and they're attracting interests both domestically and further afield.
Speaker 2 (02:50):
Well, we want to talk about that. We'll hone in
on some of those aspects as we get through the
check Conrad. But foreign ownership it can be a little
bit of a negli topic at times. What are the
pros and cons around foreign investments?
Speaker 4 (03:03):
Soonly a political question and often the first reaction isn't
always a positive one because that people feel that.
Speaker 3 (03:09):
The assets are being lost for New Zealand. When you
look at the reality of all that, it's.
Speaker 4 (03:14):
Probably nothing can be further from the truth, because a
lot of these assets come back onto the market and
often their investment mandates aren't one hundred year type family type,
dynasty type mandates.
Speaker 3 (03:26):
They are often.
Speaker 4 (03:26):
Seventy ten years when you acualize it. They typically take
assets that have been underinvested and to meet the criteria
have to reinvest it. They made a significant rate at
a rate that the neighbor probably wouldn't couldn't either afford
to do or want to do, and actually at a
level that actually puts these assets sort of best in
class for that on the source that they are in
(03:47):
the location they are. So what we have seen as
from a dairy point of view, significant investment. But you
look at horticulture and you've seen the investment there which
has both been domestic and international, that they have been
able to link with supply chains, they've been able to
link directly into other markets or achieve diversification outcomes that
(04:10):
probably New Zealand market may just be a little bit
more circumspect about, not so keen to sort of roll
into or take that level of risk. So the way
I also, I think the biggest pro is that we
do need some equity investment in the New Zealand market.
Speaker 3 (04:26):
Not debt.
Speaker 4 (04:27):
If it's just all debt, it can have swings and
roundabouts where you know, I mean, may be a little
bit over leveraged and that sort.
Speaker 3 (04:33):
Of the banks pull back and you end up with
a sort of.
Speaker 4 (04:36):
Period of not a lot of new investment coming forward,
and the esset's become somewhat stranded because there's enough liquidity.
You really want both markets operating. You don't want direct fight.
You need really good controls around that. We have more
than enough controls. And then equally you want to be
able to help balance. So it's not we're not totally
(04:58):
relying on the debt market, which in South has its
own set of problems for the New Zealand market. You know,
if I look at Australia, I reckon they've got the
balance about right. You know, they have a big domestic
market for their culture. But I think the biggest advantage
is that they've been able to diversify a lot of
assets or create new opportunities through through the funds management.
And a lot of that funds management is offshore.
Speaker 2 (05:18):
Yeah, and let us not forget, of course, these farms
still employ New Zealanders, don't they. So it's great across
the board.
Speaker 4 (05:24):
And Australia is they are one of our biggest competitors
in agriculture, so we don't want to get too far
left behind others that we might have. We just can't
rely on our rugby scores too actually to address the issues.
Speaker 2 (05:36):
So this is very true Conrad. And speaking of Ossie
Verse New Zealand, how do these two markets compare. What
are the differences?
Speaker 3 (05:43):
Well, I touched on one before.
Speaker 4 (05:45):
Obviously they have a large domestic market communits in New Zealand,
I mean just about everything reproduced we export, whereas in
Australia they have you know, significant domestic market, but they're
they're bigger exporters too. If I look at dairy again
and simple too, they're about a third of our milk
production and we'd be say we're approximately twenty one billion
(06:07):
leaders of milk because they use leaders over there there'd
be about eight point five and so and so they're
not as their market. Their dairy market isn't as developed
as ours, and they don't have the Fronterra factor in
the mix either and so that so and also our
cost of production in terms of the margins in which we.
Speaker 3 (06:28):
Operate are typically superior as well.
Speaker 4 (06:30):
And again coming back to dairy, so I think on
that on the fars, looking at light for light, there's
a lot of unders and overs when you look at
land values and it's not that comparable. But if I
look at operating margins, I think we are very attractive
for institutional vestment in New Zealand compared to as compared
(06:50):
to Australia, I think we can. I think we can
more than compete on equal footing. It's just at the
moment and it's been very difficult for capital operate until recently.
Speaker 2 (06:59):
What do you say that ours more accessible than Australia
and price.
Speaker 4 (07:03):
I think we look if you are looking at in
tier one assets and central mid Canterbury mid Kenneby particularly,
it's those price points are getting higher now and typically
that's been a keen year of interest. But if you're
looking for large scale really run around Jerry farms at
(07:24):
medium price at say thirty five thousand hectar, if you
go in with that sort of scope, you know there
are a lot of really good large scale assets across
news element would be very attractive to new capital coming in.
And some of those developments are long data now and
need updated irrigation SKIS systems, maybe herringbones converted.
Speaker 3 (07:42):
To road trees and maybe some.
Speaker 4 (07:44):
Further land use options developed as well.
Speaker 3 (07:47):
And I think you know that's where you know investment
capital can really make a difference.
Speaker 2 (07:50):
And given those differences between you seeland in Australia are
Australians now looking towards US for options to buy.
Speaker 4 (07:57):
Yeah, there's definitely. Having been there last week and caught
up with a lot of the funds, there's a real
genuine interest in the New Zealand story and there's no
question about that. The only real question is in idea
ability to navigate obouselya's investment criteria and to get a
successful application through because these are significant. There's significant DD,
(08:20):
there's significant application costs and you know, no, people don't
want to go to the exercise and not have a
reasonable shot at success. And I'm not saying for a
moment those criteria ship change, but it's just getting favorable
outcomes and meeting that benefit to New Zealand test.
Speaker 2 (08:37):
Okay, So manage fund opportunities in New Zealand, where do
those come into play in this market?
Speaker 4 (08:42):
I think it's early days there, but there's genuinely some
keen interest and we have a number of contracts that
had that type of structure and behind it that actively
raising funds to invest in dairy domestically through a manage
unit fund structure. So those options are a pearing centainly
appearing now on the level that we haven't seen for
(09:03):
a long time, and so and I do think the
confidence in the dairy sector, its ability.
Speaker 3 (09:08):
To show a.
Speaker 4 (09:11):
Cash flow, consistent cash flow and a definite level of yield,
and particularly as interest rates start to drop, and the
relative risk reward from farming. And I think also because
there's confidence in sector overall, you know, there's belief in
the liquidity of the asset itself, because you don't want
to invest in anything that you don't think you can
(09:33):
get out of. So I think the one that I'm
not sure about yet is how attractive the equity markets
are as distinct from sort of like a unit fund.
It's closed funds, it's all tied to that investment versus
an equity fund going to the equity markets and capital
(09:53):
raising against that traditional that has often often trades at
a disc out to the tangible value of the air set.
But I believe that that option will peer too. But
if you ask me what's going to drive the market
this season, mostly it will be owner operators and it
(10:15):
will be in the North Island, so many of the
assets and dairy. If I kicks with the dairy themes
today is that that forty to one hundred HECTI is
at that North Island market, that's where you see a
lot of the transactions. And in the South Island you're
still seeing a lot of family offices and that two
hundred hectes plus and so I do see that still driving.
(10:37):
And outside of those just circle locations, we're seeing medium
prices closer to mid thirties to hectia. Then then maybe
some of the headlines, you know, fifty sixty seventy thousand plus.
Speaker 2 (10:52):
And you spoke about a balanced market earlier, Conrad, where
does ditt come into play? That deep driven market and
banks being able to support these purchases.
Speaker 4 (11:01):
Now, I think there's you have to have confidence in
the forward view and that confidence is there, and banks
accordingly are getting the appropriate risk return and they're making
capital available to the sector, and that's I think that's
all favorable on The only flag God raised is that
(11:23):
just been totally reliant on the debt market hasn't served
farming assists and hasn't served daring particularly well in this
last decade. If that's your only option, it can get
a bit sticky. I really think you need to have
to have the market really growing. You need to have
a range of options available for investors to invest and
(11:45):
not rather than just relying on debt alone in those
whel I think having some of these equity and direct
finovsion options I think are helpful because it provides liquidity
in the market and gives people exit strategies.
Speaker 3 (11:58):
Without that, I think it can get stuck.
Speaker 2 (12:00):
Yeah, for sure. And on the equity just covering that
off again quickly, Conrad, is that market flourishing? Is it
alive at the moment?
Speaker 4 (12:09):
I think it's early days. Yeah, I think it's yeah.
I think this season, I would say we are seeing
a genuine interest and they are real contracts in play
at the moment that would support in the answer saying yes,
But it's still by number, the great majority of activity
at the moment is.
Speaker 3 (12:27):
Still family office.
Speaker 4 (12:29):
And and I say family office not to corporate. It's
more larger scal businesses to family saying well, yes, we
want to grow. We're taking the opportunity. There is confidence
in the banking sectors and support these growth aspirations. We
can show a good reternal capital. The one thing I
would say that has or dairy particularly, it hasn't had
(12:54):
the asset growth until this season. That probably it was
that was due to it, and there's been I think
a real hiatus of this last ten years where the
assets just haven't grown relative to the underlying value. And
there's a lot of stored value in these dairy assets,
and both internationally and locally, people are starting to understand
(13:16):
that a lot better. You know, there's there's not just
a payout story. It's actually that these assets really are
producing a quality product on an international stage and.
Speaker 3 (13:27):
Often in premium.
Speaker 4 (13:28):
Categories within its within the product lines. And I just
think we're start to see that sheet home now and
it's not it's that you know, probably overnight success takes
about ten years.
Speaker 2 (13:43):
I think.
Speaker 4 (13:44):
I think our dairy story has been solid for a
long time, but it's it's now just getting it's just
getting the realizations there that long term it's it's a
solid bit. It's it's always has been and there's nothing
new in that, but it has been a long time.
Betwo drinks if you like, in terms of actually seeing
some of these assets really achieving for valuation, because certainly
(14:06):
cash flow should drive the underlying business, but you are
also wanting to invest in something that's going to grow.
Speaker 3 (14:12):
On value over time. You don't deliberately invest in something
that's just going to stay flat for ten years.
Speaker 2 (14:16):
Yeah, And I guess that's where that comes back to
that word again, confidence, doesn't it, Conrad. For so long
farmers were riding a wave and hoping things would stay solid.
But now they've got that confidence to go forward with it.
Speaker 4 (14:29):
Yes, indeed. And I think what it was to say
is that these when I say Tier two assets, and
sometimes the source may not be quite the olliver of
source that you see close to the town boundary sometimes,
or they may be a bit further out from town,
but they're actually they are on good source, but they're
just an hour out from town, and sometimes the tracting
(14:50):
labor and a few of those things can take a
little bit of working through, but they are I think,
really good value and they show an excellent return on capital.
I think that's where you're going to see that market
operate more, you know, the Tier one as it's always.
Speaker 3 (15:07):
Always available to.
Speaker 4 (15:09):
The market, and there's always a market, particularly if they're
not large in scale one hundred hectes or something, and
they will be snapped up.
Speaker 2 (15:15):
Yeah, exactly. And it's just so good, Conrad, to be
having such a positive conversation around both islands. As well.
Speaker 4 (15:23):
Yes, absolutely, and I'm talking book both islands when I
say that, Yeah, I really believe that there will be
those opportunities present in the market.
Speaker 3 (15:29):
You know, I'd argue some of them out there already.
Speaker 2 (15:31):
Yeah, and so the key message still, Conrad, now is
a good time to get into the market if you
haven't already.
Speaker 4 (15:37):
Well, certainly for those who want to take a five
to ten year view and I'm looking to set themselves up,
I don't believe deferring that and you're really ready to
run on those objectives, I don't believe setting it out
for another couple of seasons is going to help you
get on the ladder.
Speaker 3 (15:55):
I really do think for.
Speaker 4 (15:57):
Those who have got an ambition to own their own
property and or to grow the base that they've got,
the settings.
Speaker 3 (16:03):
Now is a favorables we've seen in a very long time.
The rest of it comes down to hard work and ambition.
Speaker 2 (16:08):
Well, it sounds very positive and it's wonderful to chat
with a man with so much expertise. Conrad. Thank you
so much for your time, No doubt you're a busy man.
We'll let you get back to it.
Speaker 3 (16:17):
We're always in and no gratefulbous.
Speaker 2 (16:19):
And have a talk brilliant. That's Conrad Wilkshire, Rural General
Manager at Property Brokers. If you're wanting further information, you
can visit property brokers, dot co, dot inzaid Forward, slash
leand and Lifestyle
Speaker 1 (16:33):
Land and Lifestyle market insights on the country with Property
Brokers Bound
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