Pam Golding Property Group Newsletter | Residential | Farms | Hospitality | International

November 2011

AGRICULTURAL NEWS

DOWN ON THE FARM - The farming sector is out of favour at present. But conditions offer opportunities. Farming tends to make the news for all the wrong reasons these days – land invasions, crime, labour demands and unrest, farmers leaving the country – but often to expand rather than exit SA – abandoned farms and the ongoing thorny issue of land redistribution. Read more

FARMS FOR SALE - In this issue, we have a great selection of individually owned farms on secure country estates in Kenton-on-Sea, Waterberg, Jansenville, Dullstroom, RiebeekKasteel and Gordon’s Bay.
View them here

DOWN ON THE FARM
By Stuart Murray, Editor of IP Magazine

The farming sector is out of favour at present. But conditions offer opportunities. Farming tends to make the news for all the wrong reasons these days – land invasions, crime, labour demands and unrest, farmers leaving the country – but often to expand rather than exit SA – abandoned farms and the on-going thorny issue of land redistribution.

Opportunity in Adversity
In spite of this gloomy scenario, farms are still selling, depending on purpose and location – and, of course, price. The bold and shrewd investor can perceive opportunity in adversity.

Agriculture has Declined
There is enormous scope. Present estimates suggest that South Africa is producing less than 25% of its food needs, yet there is plenty of fertile ground and a very well established agricultural sector. In spite of this, agriculture has declined over the past 30 years from about 8% of GDP to less than 3%, according to Prof Raymond Auerbach of the School of Natural Resources and Ecological Agriculture at the Nelson Mandela Metropolitan University.

Trend
A survey around the country shows great disparity in the commercial farm market, from no sales to growing sales. But with prices as much as 30% below the norm in good years in some areas, the bargains are there. One long standing trend, which tends to bypass the “open” market, is that of farmers buying out their neighbours due to the need to increase the size of their holdings to improve economies of scale, caused by squeezed margins.

LEFT: This Great Eastern Cape and Karoo Game Farm in Graaff-Reinet is for sale for R12.8mil, RIGHT: Western Cape -Ruigtevlei Valley on river frontage. This farm boasts orchards covering 17.5 ha for the cultivation of persimmons, clementine’s, satsuma’s and marisol’s, all for the export market

KWAZULU-NATAL

Take KwaZulu-Natal. This province has reputedly the cheapest high potential agricultural land in any First World country. Many farms in the Midlands, however, have been owned by the same families for generations. This, says PGP’s Midlands principal Rob McKenzie, has created a shortage of farmland for sale exacerbated by owners of extensive farms often buying out their neighbours.

Long Term Investment
Farms, like other forms of property, are a long term investment. Says McKenzie: “20 Years ago a farm with 600 ha of grazing land and a 75% afforestation timber permit sold for R1 400 per ha. The current price would be ten times that amount. For a guaranteed return on your money, farmland is better than equities.”

‘Gentleman Farmer’
There are anomalies. In the case of the “gentleman farmer” of lifestyle property, the value per hectare increases as the size of the farm decreases, says McKenzie. “The Midlands area has evolved around the schools in the area, such as Hilton and Michaelhouse. Some parents have bought smallholdings when their children enrol and sold them when their education is complete, making sufficient profit to pay for their education.”

Smallholdings
Smallholdings are popular, particularly on fly-fishing waters, especially with city folk who are now able to conduct business outside of cities due to modern technology and are thus able to realise their dreams to own a place in the country and to successfully operate their businesses from a farm environment.

KAROO

Far south of the green rolling hills of KZN is the semi-arid Karoo where, interestingly, there has been a resurgence in demand this year for both agricultural and livestock farms, reports PGP’s Wayne Rubidge. “This has been spurred on by higher prices received for produce and the low input costs of Karoo farms,” he explains.

Resurgence
A resurgence in demand for natural fibres has improved income for farmers producing wool and mohair. Income from red meat production from cattle, sheep and goats – especially Karoo lamb – famed for its unique flavour due to the herbaceous plants, which dominate the land. “Much of the Karoo is unaffected by soaring producer costs such as fuel and fertiliser. The extensive size of these farms is such that labour costs are low since they can seldom sustain more than 5 working families,” says Rubidge.

Karoo game farm

Central Karoo
Many farm investors are looking at the central Karoo, thus avoiding the western, drier areas of Tankwa and Bushmanland which support mainly dorper sheep, boeregoats and herds of springbok. “However the large areas of land available in the west at relatively low costs per hectare have attracted new landowners who focus on mixed use farming and even arid zone medicinal crops,” he says.

Game Country
The higher carrying capacity and mixed topography of the central Karoo has paved the way for game farming as evidenced in places like Graaff-Reinet, Jansenville and Somerset East. Assuming a base land price of R3 000 per ha this broad region offers excellent game country at values far below the other traditional areas of the Eastern Cape and Northern provinces.

Stock Farming
“However,” adds Rubidge, “stock farming remains the dominant industry in the region and the Karoo in general.” Cattle and merino sheep dominate much of the central and eastern Karoo where the vegetation turns to grassveld and annual rainfall is in excess of 400 mm. An increasing trend, says Rubidge, is the number of farmers looking for cattle farming ground around the north-eastern towns of Ugie and Maclear. “With much of this area planted to forestry there is a shortage of cattle farms.”

Karoo farm - well maintained 4500ha farm is a great buy for someone who wants to start farming immediately. It is situated 50km from Sutherland

Premium Irrigation Farms
With the premium on water in this generally arid land, ground on registered irrigations schemes sells for as much as R60 000 per ha to R80 000 per ha. Says Rubidge: “Orange River irrigation farms attract the biggest premium due to the extensive sunshine and good soil, thus getting extra yield from crops, which include fodder (alfalfa and lucerne) and maize and vegetables. Moving up the Orange River past Prieska towards Globblershoop is where the Northern Cape vineyards start, moving past Upington.”

Commercial Farms
Karoo commercial farms, he points out, are normally sold as running concerns, with both buyer and seller being VAT registered, thus attracting VAT but at the zero rate.

Conservation Real Estate
A growing trend in the Great Karoo is demand for conservation real estate, to the extent that Pam Golding Properties has set up the PGP Nature Portfolio to assist buyers and sellers of these valuable properties.

Rubidge has a number of unique investments in the Karoo region which include:


•	A 6359 ha undeveloped farm, located in the Baviaanskloof, approximately 120 km west of Port Elizabeth between the Karoo and the coast, bordering on the nature reserve and the World Heritage Site. This exceptional piece of land, which includes free roaming game, is on the market for R9.6 million.
•	In the Great Karoo mountainous region are its wetlands and available here is an unique undeveloped property of 1700 ha (of which 350 ha comprise wetland, rich in bird and plant life) forming part of a conservation project for the re-introduction of several species such as serval. Price is R11.2 million.
•	In the wide semi-desert spaces of the Tankwa Karoo near its National Park on the southern border of the Northern Cape is a property of 21 500 ha – a real conservation challenge. It is priced at R10.5 million.
•	In the Klein Karoo mountainous area south of the Great Karoo is a 1732 ha gem, which has not been farmed for many years. It is located in a secluded area with many interesting geological formations and is on the market for R3.95 million.
•	In the Eastern Cape’s Zuurberg Mountains close to the Addo National Park is a 578 ha undeveloped property called Free Air. It is located in a secluded valley and has incredible indigenous forests with ancient yellowwood, milkwood, cape chestnut, sneezewood, wild olive, karooboer bean, spekboom and other special trees. The property has never been farmed and is available for R4.5 million.

WESTERN CAPE - SOUTH

Way down south in the Western Cape, PGP’s Jennifer Seggie reports better days in her area, i.e. east of Swellendam to Albertinia, including Heidelberg, Riversdale, Witsand and Stilbaai.

Life after the Drought
“After the worst drought in 140 years, the rain is back, the ploughs are out, the animals fattening and interest in buying farms – commercial lifestyle and getaways – is reaching levels last seen a couple of years ago,” she reports. “I have been inundated with emails and phone calls regarding farms we have for sale and these are now being translated into visits from all over the country, especially Gauteng. This is once again resulting in sales.”

Dairy Farming
But, as elsewhere, patterns are changing. Riversdale/Heidelberg has traditionally been a dairy farming area but because of the drought, low milk prices and high input costs, farmers have been finding it difficult to survive. “Last year,” says Seggie, “a number of dairy farmers sold their herds and moved into beef, lamb and wool. However, milk prices are beginning to rise again. We have a number of productive dairy farms still on the market.” An example is a 109 ha farm close to Heidelberg complete with ±380 Jersey cows and 53 ha under irrigation priced at R8.75 million.

Dryland Farms
Dryland farms, including grain farms in the area from the N2 to the sea, appeal to people wishing to farm extensively, says Seggie. Two such farms near Witsand recently sold for ±R12 000 per ha.

Thatching Grass Farming
Prices of the “dekriet” (thatching grass) farms found in this part of South Africa, which were once a good source of income have dropped due to the building recession. “This could be the time to secure this land before the demand for thatch once again increases,” suggests Seggie. “One of these farms with a cottage, barn and boreholes can be bought for R1.35 million.”

Water-Rich Farms
Seggie points out that water has become a determining factor in valuing farms in the area. However, buyers must check registered water rights as one can no longer simply use water flowing over your land. Water rights amount to ±7000 m³ of water per hectare per year. PGP has a number of water-rich farms for sale.

An example is a farm of 147 ha near Riversdale which has 118,5 ha registered water rights and 87 ha under permanent irrigation. It is for sale along with 100 Dohne merino ewes for
R6.5 million.

Western Cape -Ruigtevlei Valley on river frontage. This farm boasts orchards covering 17.5 ha for the cultivation of persimmons, clementine’s, satsuma’s and marisol’s, all for the export market

Lifestyle Farms
There is a growing demand for lifestyle farms in Seggie’s area. “People dream of retiring to a beautiful place near the sea or mountains. I have just sold 2 such properties bordering the famous Grootvadersbosch forest and Duivenhoks River. One of 156 ha sold for R1.8 million and the other of 50 ha sold for R950 000.”

Coastal Lifestyle Farms
Lifestyle farms on the coast are more expensive – an extreme example on PGP’s books being a property of around 1000 ha of lowland fynbos, 2 km of sea-frontage and 1 km of river frontage for R39 million.

“But not all farms are so expensive,” says Seggie. “For R1.5 million you can buy 65 ha with a cottage situated in a quiet, hilly scenic area.”

Contact:
Midlands - Rob McKenzie - midlands@pamgolding.co.za / office +27 (0) 33 342 8108
Karoo - Wayne Rubidge - karoo@pamgolding.co.za / office +27 (0) 49 846 0917
Western Cape - Jennifer Seggie - jseggie@pamgolding.co.za / office +27 (0) 28 713 4940

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AGRICULTURAL FARMS FOR SALE

#1
SOUTH AFRICA - EASTERN CAPE - KENTON ON SEA: R6.42mil

Game Farm with River Frontage
This established game farm of 428 hectares, situated in the upper Kariega River valley, offersexcellent infrastructure, lodge, and is fully game fenced with river frontage.

Besides the beautiful scenery with vertical cliffs along the river, the game farm also includes all game currently on the property, inter alia Giraffe, Waterbuck, Kudu and Impala.

Contact
Michael Wilmot
Email: michael.wilmot@pamgolding.co.za
Cell: +27 (0) 82 569 2136
Office: +27 (0) 46 648 1203
Web Access: 1KO1030345