Bor­row­ers re­turn to the land mar­ket as lenders loosen the purse strings

Irish Independent - Farming - - PROPERTY - JIM O’BRIEN

BOR­ROW­ERS are re­turn­ing to a land mar­ket which has been dom­i­nated in re­cent years by cash buy­ers.

That’s the ver­dict from Clive Ka­vanagh of Jor­dan Auc­tion­eers in his re­view of 2018 land sales.

“Un­til 2016 about 80pc of land sales trans­acted by Jor­dans in­volved cash buy­ers. In 2017 and 2018 we es­ti­mate this per­cent­age to be less than 40pc. Cus­tomers tell us that while bank lend­ing has im­proved this is largely to cus­tomers with very strong en­ter­prises, low debt lev­els and with firm busi­ness plans.”

De­scrib­ing 2018 as ‘dif­fi­cult’ Mr Ka­vanagh says that Jor­dans ex­pe­ri­enced a slow start to the sea­son due to a com­bi­na­tion of ad­verse weather con­di­tions.

This meant that land sales were de­layed from the tra­di­tional start­ing time of March and April to May and June

“In ad­di­tion to this the fod­der cri­sis meant both buy­ers and sell­ers were more fo­cussed on day to day sur­vival than mak­ing key long term de­ci­sions,” Mr Ka­vanagh said.

In the cur­rent land mar­ket smaller parcels are very much de­pen­dent on lo­cal in­ter­est and are hard to sell “un­less you have a num­ber of ad­join­ing farm­ers who are look­ing to ex­pand and will­ing to bid against each other,” the re­port stated.

Larger farms can of­ten be eas­ier to sell as cus­tomers are will­ing to re­lo­cate if the prop­erty and the price are right. In this re­gard Mr Ka­vanagh says qual­ity is key, “con­sid­er­ing the num­ber of bad win­ters and sum­mers ex­pe­ri­enced in re­cent times sell­ing poor or mar­ginal land is prov­ing dif­fi­cult.”

While there were some in­di­ca­tions dur­ing the year that busi­ness peo­ple were be­gin­ning to come back to the land mar­ket,

Mr Ka­vanagh’s re­port sug­gests that the type of non-farm­ing buyer who drove land sales in the days of the Tiger is not a player in the cur­rent mar­ket.

The builders and de­vel­op­ers of the boom years who had come from farm­ing en­ter­prises and wanted to buy land as soon as they had made some money are no longer around.

‘Love of the land’

Ac­cord­ing to the Jor­dan re­port the new gen­er­a­tion of busi­ness peo­ple has a clear fo­cus on as­set re­turn and com­mer­cial vi­a­bil­ity.

“The pur­chase of farm­land never stacks [up] on this ba­sis and the ‘love of the land’ does not carry the weight of old “Mr Ka­vanagh said.

Dairy farm­ers are among the big play­ers in the land mar­ket, ac­cord­ing to the re­port, and the con­sol­i­da­tion of dairy farm­ers is a key driver as dairy farm­ers seek to buy ad­ja­cent land parcels and off-load out farms.

Ac­cord­ing to Mr Ka­vanagh, tillage and beef farm­ers re­main ret­i­cent about buy­ing land, how­ever, the re­port says the land mar­ket is still ac­tive in tra­di­tional tillage ar­eas.

“In stronger tillage ar­eas such as south Kil­dare the ap­petite still re­mains to ex­pand where many farms have been built over gen­er­a­tions and ex­ist­ing debt lev­els are low. This gives them the po­ten­tial to raise the nec­es­sary cap­i­tal if re­quired,” the re­port said.

Look­ing ahead, the re­port points to Brexit as a real con­cern, and the great­est threat it poses at the mo­ment lies in the un­cer­tainty it gen­er­ates.

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