Dairy farms still in keen demand

Dairy farm prices remain firm, despite the steady fall in milk returns.

Dairy farm prices are holding their own and have continued to sell despite the fallout in milk prices, industry experts say.

Bayleys Country national manager Simon Anderson said there was no difference in what buyers were willing to pay and they looked at the industry as a long-term investment.

In fact, "we are probably short of listings and have had plenty of inquiry".

Expats and overseas buyers were expressing interest but existing farmers made up the biggest percentage of buyers, he said.

"Typically our biggest buyers' pool is existing farmers. There is no shortage, in fact I have had two phone calls today from buyers who had large blocks of land so it's business as usual.

"Our sales team in the Bay of Plenty has a handle on things and what we are seeing is, steady as she goes."

On Friday PGG Wrightson Real Estate sold a Taupo dairy farm at auction for $2.97 million to another farmer.

Paul O'Sullivan, the agent who marketed the property, said the auction attracted wide interest with 40 people in the room, including bankers, dairy company representatives, prominent rural sector accountants and valuers.

The farm's previous owner was leaving the industry and considerable interest was shown in the farm before auction.

"While the farm has a 100ha milking platform and a 3-year-old 30-a-side herringbone dairy shed, it has not carried any stock through the winter.

"So it was a good result."

Mr O'Sullivan said there had been no noticeable downturn in dairy farm values.

"Although some dairy farmers face difficult times, motivation for the sector remains robust," he said.

"We are still receiving calls from investors focused on considerably longer timeframes than the next payout."

Long-term investors are not put off by dairy's recent travails, he said.

"There are strong arguments to suggest that we have reached the low point of the dairy cycle. Investors looking to benefit from the underlying strength of New Zealand primary production do not appear to be hesitating in their enthusiasm to acquire rural property."

Figures from the Real Estate Institute of New Zealand show in 2013, 18 dairy farms sold in the Bay of Plenty for a sale price median of $3,325,000 compared to 18 in 2014, that had a sale price median of $3,625,000.