Carmen is a social issues and rural reporter at the Bay of Plenty Times

Kiwifruit orchard sales a 'land grab'

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Orchard sales in the Western Bay of Plenty have jumped as demand for kiwifruit blocks outstrips supply with one agent describing it as "a land grab".

Figures from the Real Estate Institute of New Zealand show 83 orchards sold in 2014 for a sale median price of $1.015 million compared to 94 orchards in 2015 that sold for a sale price median of $1.33 million.

In the first quarter of 2016, 31 orchards sold for a sale price median of $1.395 million in contrast to 22 orchard sales over the same time frames in 2015 for a median sale price of $1.517 million.

REINZ rural spokesman Brian Peacocke said the horticulture sector in the Bay of Plenty was in "very good heart".

Quality gold kiwifruit orchards were exceeding previous records while good demand and prices for quality green kiwifruit blocks, while Zespri's announcement of an increase in licences for gold kiwifruit plantings "is an indication of the strength of the industry".

David McLaren from PGG Wrightson Real Estate Tauranga said green kiwifruit blocks were selling for up to $400,000 per canopy hectare while gold had been fetching $600,000 per canopy hectare.

"It's been driven by what we call production block orchards ... great income earning orchards. So that is where the leap in values is."

Mr McLaren said in his view the trend would continue because of profitability margins which meant "they can still get good returns buying at these levels".

He recently sold a green orchard to buyers who wanted to to convert to G3.

"It's an interesting time for us and there is a bit of a land grab ... because it's supply and demand."

Bayleys national country manager Simon Anderson said the rise in activity was driven by several factors including good demand for kiwifruit overseas and the release of new G3 licences.

The majority of interest was from orchardists not investors who were looking to expand, he said.

It had definitely seen a strengthening of price, however "there is a level that buyers are going to, they are not silly in their numbers so that sort of controls the market".

Location and the root stock quality of the orchard were just some of the components that came into play while it was also seeing an increase in inquiries about greenfield developments suitable for conversion.

Mr Anderson had been involved with the industry for 17 years "and this is definitely the strongest the market has been price and buyer wise in the time I have been involved".

New Zealand Kiwifruit Growers Inc president Doug Brown said it was encouraging to see orchard values bounce back from pre Psa levels.

"People will look at their own risk profiles and make their investment decisions accordingly but we have to remember it is a primary industry and we are at the mercy of climatic events, there is no guarantees in this game but I think perhaps we will see a number of green growers looking to diversify into gold and hopefully by doing that increase their land values even more."

Kiwifruit grower Neil Trebilco said growers were confident about the future but he was not considering an expansion due to risk.

If nothing untoward happens then you had made a smart decision but "personally I'm more inclined ... to pay down debt while the orchard prices are good".

Zespri grower and external relations general manager David Courtney said it was releasing 400 hectares of Gold3 licence this year with additional licences expected to be released in 2017, 2018 and 2019.

There had been very positive interest from the industry, he said.

- Bay of Plenty Times

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