Good quality farm land in South Africa remains a sound investment and in spite of commanding a premium price, it is still competitively priced compared to similar properties elsewhere in Africa, says Wayne Rubidge, Pam Golding Properties’ area manager for the Karoo.
“Underpinned by the country’s substantial infrastructure, support services and expertise, buying a good quality farm in South Africa has the potential for a good investment. As a result, investors are generally prepared to pay a premium for quality farms - and the better the agricultural or ranching potential, the higher the premium.”
He says when determining what should be paid for a top farm investors consider a variety of factors, such as water security, soils, quality of infrastructure and location. These top farms often include additional prestigious components such as clientele when it comes to game farm, for example, or historic aspects such as Western Cape wine and fruit farms, Eastern Cape livestock farms or trophy Karoo farms. Most of these farms seldom make it to the open market as owners usually prefer more discreet ways of selling their sought after properties.
Rubidge says that in South Africa the terms ‘agricultural property’ or ‘farm land’ could mean a wide range of property types and land usage.
“Often the term ‘agriculture ‘is interpreted as relating to a property that involves planting crops - and for purpose of clarity we refer to it as such. Most other categories of farm properties are for the raising or management of animals and these include livestock farms, game farms, and dairy farms. There are two types - intensive livestock or breeding farms and extensive farms. The word ‘farm’ then is a generic term for all types of farming land whether this is range land, a game farm, a potato farm or a lifestyle farm. A lifestyle farm is still a farm, even though the land use relates to enjoying the aesthetics and scenic aspect of the property and surrounds, and this is often coupled with a tourism component.”
He says many South Africans have some sort of farming experience, skills or farming background and are known to be some of the most resourceful - as evidenced by the demand for South African farmers from other African countries.
“In many of these more favourable farming countries land was cheap compared to South Africa, but recently there has been a surge of investment in African farming land by many multinational companies and countries. The driving forces behind this are food production and food security. The result is that land prices have risen substantially in many favoured countries, putting them on par with South African prices. An example of this is the continent’s largest flood plain in Sudan, where Nile irrigation ground is selling for the same price a hectare as that being paid in South Africa’s irrigation schemes, which is more than R80 000/ha. This price escalates up to R250 000/ha if planted with citrus, for example,” says Rubidge.
Pam Golding Properties is marketing a private 3 000ha Eastern Cape game farm at R7 000/ha. The farm has been in the same family and well maintained for the past 150 years, and has an impressive homestead in mature, landscaped surroundings with abundant water.
Also in the Eastern Cape is a profitable export citrus farm in full production with a variety of fruits. This well known property is on the market for R21 million. And available in one of the best mixed farming areas of the Karoo is a historic property of over 8 000ha. The farm also lends itself to the breeding of rare game and has a historic farmstead area.
“In the Western Cape there is growing interest in the established wine farms that come onto the market from time to time. Like the other farms mentioned, these are unusual properties and aren’t readily available. In the Northern Cape are some exceptional game and livestock ranching spreads. Due to their size they attract a special type of buyer who are drawn by the vast open spaces. Examples of what is currently available include a 13 000ha Kalahari game farm for US$10m and a 20 000ha sheep farming property for R40m,” says Rubidge.
“Besides these rare farms there are speciality farms that are available from time to time. These boutique farming operations are equally profitable and an example is an olive farm complete with new processing equipment and supply contracts at R35m. It still has huge undeveloped potential and offers sound returns in capital growth and income - particularly as there is a possibility of restrictions being imposed on cheaper imports.
“Another example of a ‘limited edition’ is a 1 000ha seafront cattle or game farm with over 5 km of coastline priced at R50m. At present it’s a cattle farm, but the property has a very high carrying capacity and the potential to be converted to a game farm.
“All these properties have become available for specific reasons, not because of the properties themselves. There are many options for SA and foreign investors who are considering buying farms in SA due to the diversity of farming opportunities. Sustainable farms can be priced from R1.5 million, which with little effort can carry all its costs while allowing owners to enjoy a rural lifestyle. A popular price range for South Africans investing in farms is between R8m and R12m, but there is increasing desire to increase this investment as land is still considered an excellent option,” says Rubidge.
Call 049 8923495 or email wayne.rubidge@pamgolding.co.za.
