Growing appetite for foreign investments by the strongly performing corporate sector in the U.S. is expected to deliver a much needed kicker to Australia’s agricultural sector this year.
Due in part to rising commodity prices and foreign investor desire to maximise returns, JLL associate director of Agribusiness research Tim McMaster expects U.S. investors to lead a renewed charge for Australian agricultural properties in 2025.
McMaster expects growing interest from the U.S. and other foreign investors to ignite a turnaround in farmland sales volumes, which based on Rural Bank numbers are down by around half (43%) the 2021 peak. Due to drier conditions and lingering inflation concerns, a lot of [property] owners either rejected offers or decided not to bring land to market last year.
“The US economy, in particular, continues to perform strongly. As the U.S. corporate sector is posting record profits, we expect they’ll look to invest in international markets.” McMaster noted.
“We expect to see a higher volume of transactions in 2025 over the prior year as the agriculture commodity market continues to rebound.”
McMaster also expects an eventual downward movement in interest rates to add even more favourable momentum to buyer sentiment.
However, while sales volumes are down, McMaster reminds the market that agricultural land pricing in Australia remains strong. Rural Bank data suggests the national median price for farmland has tripled in the past 10 years, rising by 201%.
He attributes the increasing global investment appeal of Australian agricultural land – which has seen the average dollar value per hectare jump to $9184.70 per hectare - to the performance of commodities - plus comparative land values overseas.
To put the value of Australian agricultural land in context, recently released data puts the value of arable land in Europe at around $17,500 per hectare and agricultural land in the U.S. at around $16,200 per hectare.
“With such significant disparity in value, this price point for Australian land allows for a healthy return on investment, and we’re seeing continued strong foreign interest,” McMaster said.
Included within U.S. agricultural property transactions in Australia last year were the US Nasdaq-listed Agriculture & Natural Solutions Acquisition Corporation which bought the Australian Food & Agriculture Company portfolio for $780 million — which spanned 13 NSW farms totalling 225,405 hectares.
Based on the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) December quarter Agricultural Commodities report, The gross value of agricultural production is forecast to rise by $6 billion to $88.4 billion in 2024–25 ($94.3 billion including fisheries and forestry), the second highest result on record.
The overall rise is driven by higher livestock and livestock product values ($3.8 billion higher) as rising prices incentivise turn-off despite improved seasonal conditions. Crop production values are also forecast to rise ($2.2 billion higher) as rising production more than offsets lower prices.
