Investors target Kiwi farms in global buy-up

Media Release
Date 27.8.2009

British rural property investors to target Kiwi farms as part of global buy-up

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Heartland rural New Zealand – proving a temptation to British horticultural and agricultural investors.

A lack of faith in global banking and financial institutions is driving wealthy British farmers and institutional money managers to look at large scale investment in New Zealand’s rural sector.

The collapse of banks and building societies such as Iceland’s Landsbanki and the Dunfermline Building Society in Scotland - and other UK lending institutions such as Northern Rock, RBS and Lloyds TSB being part nationalised to guarantee their stability - has sent jitters through the British economy.

Now, well-heeled farmers who have been ‘on the land’ for centuries, are withdrawing funds and returning to their investment roots - lining up New Zealand farm investments as a land-bank holdings which are seen as a safer investment in the current climate..

One of Britain’s biggest agricultural and rural property companies, Smiths Gore, has entered into a working alliance with leading New Zealand real estate agency Bayleys to channel millions of pounds of UK investment funds into Kiwi rural properties.

Smiths Gore has some 810,000 hectares of rural land under management in the UK - acting for private and institutional clients, public sector bodies and charities. With 25 offices, the company delivers a full-service for rural investors – from locating suitable farming properties and setting up finance, through to supplier contract negotiations and farm management.

Smiths Gore partner Giles Wordsworth said the partnership with Bayleys would provide a direct access for UK funds to invest in New Zealand’s rural property sector, at a time when land values here had fallen considerably off their peak of two years ago and were now becoming more attractively priced from a purely investment perspective.

“UK farm values have fallen from 2008, but not to the extent they have in New Zealand. This has created an investment disparity which many of our clients have expressed an interest in taking advantage of,” said Mr Wordsworth, Head of Smiths Gore’s National Farm Agency.

“Lesser quality farming units in the UK are now comparably priced to good quality farming units in New Zealand. However, your market has considerably more long term uplift potential than ours, and with the added benefit of being part of a globally diversified portfolio, they are becoming increasingly more attractive.

“For decades, English agricultural and horticultural investors have been buying productive rural property around the world – such Kenya and Zimbabwe post war, and more lately Chile for its wine production and Argentina for its beef herds.

“With Bayleys’ extensive New Zealand network of farming contacts and property listings, we are confident of putting together a sizeable portfolio of rural real estate to present to our clientele. New Zealand has long set the rural production benchmarks British farmers admire.”

To support the UK marketing initiative, Bayleys is undertaking an eight-centre country property roadshow in October this year – with the specific aim of selling New Zealand farms to English, Scottish and Welsh investors.
As well as presenting properties to large-scale rural investors, Bayleys in conjunction with law firm Wynn Williams and the National Bank of New Zealand are presenting to UK farmers wanting relocate to New Zealand to take advantage of our climate and lifestyle opportunities.

Bayleys Country manager, Richard Graham, said the company was currently compiling a Country magazine portfolio of New Zealand farms, vineyards, and horticultural blocks to showcase not only at the roadshow seminars, but also to Smiths Gore’s extensive investor database.

Bayleys sold $135million of property from its spring 2007 Country magazine, and $106million worth of country property from last year’s publication. Properties listed in Bayleys next Country magazine will be presented to the UK market in October through the farming seminars.

However, Mr Wordsworth cautioned that Kiwi rural property vendors should not build up unrealistic price expectations for their farms in the hope of making a quick buck from investors on the other side of the world.

“Our clients are extremely astute when it comes to land pricing and the operational structures of the farming business they are buying. They are highly discerning when it comes to investment, and certainly won’t be throwing around funds without clear advice and input from professionals such as Bayleys,” Mr Wordsworth said.

“However, they are aware of the market conditions currently being faced in New Zealand, and as a result, are prepared to pay fair market value for properties.

“We manage many investment holdings and our typical UK investors would buy the productive unit as a going concern - whether it be sheep and beef, dairy, arable or viticulture – then put in local management to run the operation. This local management is often the previous owner, who is guaranteed an income from the land yet is free from the restraints and concerns of funding the business.

“The world is becoming a much smaller place to conduct commerce. For example, technology and communications now allow for the day-to-day operations of a farm in Matamata for example, to be viewed and managed in ‘real time’ by an owner in Yorkshire,” Mr Wordsworth added.

ENDS

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