The price of Australian farmland has surged in the past three years, with strong interest from overseas, but investors are now selling the land back to locals.
According to Ray White Commercial Head of Research Vanessa Rader, foreign ownership of agricultural land has reduced over the past two years.
Foreign ownership of Australian farmland fell 10 per cent over the 2021/22 period, with overseas owners representing 12.3 per cent of all agricultural land – the lowest rate in the past seven years.
Leasehold land remains the major holding for most foreign entities, with 47.71 million hectares held, while 10.22 million hectares were held freehold.
China has the greatest land holding, representing two per cent of all agricultural land, while markets such as the Netherlands and US have greater freehold ownership.
Of the top 10 countries that invest in Australia, only Canada has grown its holdings over the past year, while all other countries have reduced their exposure.
Ms Rader said record farmland prices and uncertain weather conditions had led some investors to sell.
“During this year we have seen the sale of large perpetual leasehold and freehold interests as well as the disposal of multiple smaller properties given the uncertainty surrounding commodity prices and possible El Niño effects on weather patterns going forward, which has already impacted livestock values,” Ms Rader said.
She said 85 per cent of all foreign-owned agricultural land was for livestock, which represented 41.01 million hectares.
This is a 9.2 per cent decline over the past year, with the remainder representing crops, forestry and intensive horticulture.
Queensland and the Northern Territory have the largest foreign ownership, at 15.35 million and 14.53 million hectares respectively.
All other states, excluding the NT, have had a decline in these holdings.
The NT currently has 27.4 per cent of all agricultural land with some form of foreign ownership, while the smaller Tasmanian market represents 23.9 per cent, Western Australia with 12.8 per cent and Queensland 11.4 per cent.
Ms Rader said the NT was the only state to see an increase in foreign holdings over the past year, and the only market to increase its livestock holdings.
“Overall assets for livestock production have decreased foreign ownership by 9.2 per cent due to uncertainty surrounding value, demand and expectations of a continued reduction in beef and lamb prices,” she said.
“Western Australia has been the market to show the greatest sell-off of 3.3 million hectares or 22.9 per cent of the state’s foreign ownership, 95.5 per cent of this land was for livestock, while SA has seen a 38.5 per cent proportionate reduction in livestock property.”
“Given the huge surge in farmland price index over the past three years, we may continue to see the sell-off by foreign investors looking to capitalise on these improved prices.
“National preliminary 2023 values have grown by 16.3 per cent to $4689ha over the past year or 70.3 per cent over the past three years.
“With the WA index moving at a record 99.7 per cent over the past three years, the continued sell-down of foreign controlled assets can be anticipated.”