Add Category
A property in the Western Australia's Great Southern region has sold for a new record price of $100 million and real estate experts say farmland values in the state have the potential to climb even higher.
Key points:
- The sale price was $10 million more than original real estate valuation
- Rural Bank's head of agribusiness development says WA farmland sells a discount relative to its productive capacity
- Agents expect more interest in WA farmland from the east coast and abroad
A Victorian buyer is believed to have purchased Cherylton Farms, a 8,500-hectare mixed farm in Kojonup.
The value surpasses the expected dollar figure set by real estate group LAWD, which originally predicted the land would go for $10 million less.
Director Danny Thomas expects WA to become an increasingly popular property-bidding ground for eastern buyers.
"I think you're going to continue to see a wave of money coming out of the east coast of Australia and from overseas for West Australian assets," he said.
"These assets, they look fantastic [and] they represent great value, when you look at the yields that you're achieving with the adoption of better technologies and precision farming."
He said when the property was initially valued at $90 million, he saw an element of disbelief from locals.
"There was some sort of pessimism creeping in, and some of the locals saying, 'You know, this market can't continue to run'," Mr Thomas said.
"A lot of people in the WA Wheatbelt I think don't really understand in a national context, what they're sitting on.
"I think familiarity breeds contempt."
The previous WA farm sale record was $97 million, for a 22,000-hectare Mingenew property sold in 2020.
WA values lag
Rural Bank's head of agribusiness development Andrew Smith agreed prices were likely to increase across the state.
The bank has monitored Australian farmland sales for more than 25 years.
Mr Smith said the median price per hectare in WA was sitting at just over $4,700, a figure that had doubled since 2018.
"When you look at WA relative to other states across the country it trades at a bit of a discount, relative to its productive capacity," Mr Smith said.
"As property comes up, people will be casting an eye as to what has been selling out in South Australia or Victoria, for example, which are between 20 to 30 per cent higher [in price] in some cases.
"We did see a bit of a lag affect really, because those higher rainfall areas of the grain belt in Victoria took a lift in 2019 and 2020 and reached values we never thought would be seen.
"That then played out through South Australia and I think we are now seeing that in WA."
Why the millions for Cherylton?
Mr Thomas said the work put in to the Cherylton property by previous owners contributed to the value.
"There's been a fair bit of time, money and human endeavour that's gone into aggregating the original six or seven properties," he said.
"Transforming those properties to be something which is … efficient, and run as a single business doesn't happen overnight."
He said with all the time and human endeavour put into property, it was an ideal purchase for someone new to the WA market.
"If you're an outside investor, and you're looking for a cornerstone, and you're wanting to do a portfolio build in Western Australia, then this is the block that you start with," Mr Thomas said.
"The level of engagement when you consider that you're giving market guidance around $100 million is quite remarkable."