A 2300ha farm near Deniliquin has been listed for $24 million, highlighting a continued appetite for rural properties across the district.
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The mixed farm, ‘Kendorwal’, is located 37km south-west of Deniliquin at Bunnaloo.
It has previously carried approximately 1,000 breeding Merinos in conjunction with an extensive cropping program overseen by local agronomists at IK Caldwell.
The property was last purchased in 2016 by the company Australian Xinyangfeng Fertilizer Pty Ltd, which is owned by one of China's largest producers of fertilisers, Hubei Xinyangfeng.
Selling agent, David Lees from Border Real Estate, said the vendor has converted the farm from what was standard cropping and grazing country into being “state of the art irrigation infrastructure”, in combination with improved farming practices.
“There's been some serious investment in irrigation infrastructure, but they've also spent big money on things like gypsum and fertiliser getting the soil nutrition right,” he said.
“I know that the interest rate rises are probably headwinds, but the reality is that soil moisture profile means that they're going to get a very good start if they take it on.”
‘Kendorwal’ is listed on the market for $24 million, which includes 1,665 megalitres of water entitlements and 3,559ML delivery entitlements available for purchase with the property.
According to the selling agent, the property also has no shortage of water supply with ample supply wheels of a Murray Irrigation Limited main channel augmented with a 770ML turkey nest dam and main pump complex, which is “near new” and feeds five centre pivots. While supporting drainage works undertaken by the vendor, the impacts from the 2022 flood was minimal.
Mr Lees said this property is also a rare find in that it’s hard to get properties of this scale which are so well improved.
“The yields they're getting are really a testament to the money they've put in over the journey,” he said.
“If most people generally operate with a three to five per cent operating return and expectations for capital growth in the order of five to seven per cent capital growth, for the next year or two, it should be possible to achieve substantially above average operating returns based on the soil moisture profile, irrigation water availability, and grain prices.”
“I actually think that will probably trump the interest rate rises.”
Mr Lees said inquiry on ‘Kendorwal’ has “certainly” been strong.
There have already been a number of inspections and 10 information memorandums (IM), which are detailed brochures of the property, were sent out to those who had requested copies on Thursday.
“This price bracket is probably right on the threshold of being somewhere between corporate and/or large scale family offices, or local farmers,” he said.
“We've had guys from Victoria come up and have a look at it… so it's a big enough block to attract people like that to have a stand alone operation because they might be locked out of their local market and can't expand.”
Deniliquin Elders Real Estate agent Matt Horne said the price on the property, and the results of the recent report from the NSW Valuer General, highlight confidence is still high in rural Australia.
Its listing for $24 million comes three months after a $17.8 million sale which was reported as “the most significant for Deniliquin and surrounding districts” at the time.
The price was paid for the aggregation of Booroorban properties of ‘Cooneen’, ‘Oaklands’ and ‘Park Estate’ ($16 million alone) and its water entitlements.
Rural land values in the Murray region rose by 56 per cent overall in the 12 months to July 1 2022, according to the NSW Valuer General’s report.
“Australian agricultural land values continue to appreciate, well above most asset values in the rest of the economy,” Mr Horne said.
“The rate of average annual capital appreciation over the last five years was 9.5 per cent, and year-on-year growth in the second quarter of 2022 was 15.7 per cent.
“The continued strength of commodity prices and favourable seasonal conditions has created strong demand for rural property.
“The strength in the market has also reduced the incentive for landowners to sell property, as they take advantage of these conditions.
“We expect that the low supply of property on the market, coupled with strong demand, will continue to support property prices throughout the next 12 months.
“In regard to foreign investment, there has been an appetite for quality larger scale assets across the Riverina and Goulburn Valley, but little to no foreign investment around the Deniliquin district in recent years.”
After nine consecutive interest rate hikes, Mr Lees believes the rural property market in this region has started to stabilise.
“The prevailing sentiment is that interest rates are going up and therefore, the competition should subside a bit” he said.
“But offsetting that is the fact that most people came out of cropping last year better than what they thought they might have because of the floods at a local level, and actually got better yields and the price was still fairly solid.”
“My suspicion is that they're coming into this season probably as well placed as they could have hoped for given the challenges of last season.”
Mr Lees added the Murray Darling Basin is at 97 per cent full - 21,596 of 22,256 gigalitres of water across all of the Basin’s storages as of February 1.
He said the combination of an abundance of water in the catchments, a strong soil water profile and historically high grain prices, the property has the potential to “offset the negative of the interest rate rises and operating costs”.
‘Kendorwal’ is for sale by expressions of interest closing March 3, unless sold prior. For more information, go to https://borderrealestate.com.au/property/2248-tantonan-road-bunnaloo-nsw-2731/.