Property Brokers GM explains three key drivers influencing demand for rural real estate

Property Brokers GM explains three key drivers influencing demand for rural real estate

General Manager at Property Brokers Conrad Wilkshire joined REX host Dominic George to chat about the three key drivers influencing demand for rural real estate.

Wilkshire told George that rural Aotearoa has seen a reasonably kind autumn, which he remains optimistic will continue into winter.

 With rising interest rates in the past few years, he explained that interest rates have definitely had a significant impact on the 2023 market.

"This calendar year the number of sales are about 50% back on the same time last year through the autumn compared to last year's autumn."

Despite these statistics appearing discouraging on the surface, Wilkshire is hopeful the worst will be behind the rural community, particularly with the underlying strength of Fonterra moving towards 2024.

"I do believe that when you are looking at our dairy sector, you have to look through to Fonterra.

"I do believe some of the uncertainty around the Fonterra business model and some of the angst that went with that did play into a lot of the lack of confidence in the dairy outlook when in fact Fonterra is probably on a much firmer footing than it has been in a long time."

After catching up with senior banking industry leaders in the past few weeks, Wilkshire said there is a collective view that rural industries need to collaborate more with the outer operators, operating at the small to medium scale level.

"The sheep and beef guys have had a very big run-up in valuation but the dairy side of the equation has not.

"We really believe the opportunity to come up with different models, not just equity partnerships but actually where the vendor is part of the solution, the more people I speak to I think the stronger the solution.

"With Fonterra's business model being in good heart and our trading partners on the improve, we are in good shape to work with those vendors."

Options such as lease-to-buy arrangements or contracting out a sale so it doesn't happen in one day are ways he believes the next generation could be able to get their way into the rural industry.

He also noted that banks are unlikely to have the ability to facilitate the risk and uncertainty that might go with non-compliant farms that haven't quite ticked all the boxes, which is where vendors could prove a useful tool.