Public and political opinion could be an impediment to new foreign investment, according to the regional agribusiness director of one of the world’s largest real estate companies.
CBRE’s regional director of agribusiness Danny Thomas was addressing the Agribusiness Gippsland 2016 conference, at Lardner Park, Warragul.
“Public and political opinion, about foreign investment, is one of the things which can stand in the way of maximising the advantages that come from capturing this capital, and transforming agriculture into what it could be,” Mr Thomas said.
He said when Wollogorang Station, on the Northern Territory-Queensland border was sold to a Chinese investor, some of the comments “about what they wanted to do to the selling agents were quite mind blowing.”
“I had 108 haters (on the blog) out there who thought I was a mongrel for selling Wollogorang Station, to a foreign direct investor.”
He told the forum, CBRE was a Fortune 500 country and the world’s largest real estate company, by revenue.
The future was bright for investment in agriculture, from sectors as diverse as pension and superannuation funds, government sovereign wealth funds and high net worth individuals, particularly from Europe.
“We are going through a general agricultural renaissance, while so much of that is driven by foreign investment, there is also a whole lot of high net worth, seeing the opportunity to get set in production agriculture,” Mr Thomas said.
“We have never had so much interest from the really old families, and really old money, from out of Europe as what we have had at the moment.”
He said European investors were looking to preserve capital, as they were looking at rapid deflation of asset values.
Mr Thomas said they wanted to put their money into an asset which would appreciate, or “at the very least, level peg.”
Mr Thomas said foreign investors were looking for data rich assets long run production and financial records.
Mr Thomas said unfortunately some vendors didn’t have that information.
“If you want the premium price, the more information you can provide to these sophisticated investors the more likely you are to get it,” Mr Thomas said.
“They want scale assets, they want high quality properties, which typically do not require further capital, albeit there are groups in there who will consider taking some development risk, if they can see a path to realisation.”
He said the big crisis of confidence for investors in that part of the market was management.
“In the absence of management, they want a lessee, someone they know can run the property and steward the investment for them, they don’t want to be managing,” he said.
“They want some really good eyes and ears and someone who can run the property for them.
Investors wanted strong paths to market – “more and more we are starting to see the supermarkets putting their money where their mouths are, in taking long term off-take positions or contemplating co-investments. “