KEY POINTS:
Soaring rural property values have lifted profit at Sir Selwyn Cushing's Rural Equities more than 10-fold.
Record net profit at the rural property investment and management company for the year ending June 30 was $32.4 million, compared with $2.7 million the previous year.
The company owns 62.4 per
cent of the units in New Zealand Rural Property Trust, for which it was also the manager.
The trust's properties and assets were currently valued at more than $230 million, including a portfolio of 30 farms nationwide and a pine forest near Ngaruawahia.
The leap in profit reflected strong gains in rural property values, the company said.
Chairman Sir Selwyn, who owns 51 per cent of Rural Equities, said the performance vindicated investment in the sector.
Rural Equities raised its unit ownership of the trust to 62.4 per cent during the year from 54.2 per cent.
"The key positive influence on the rural sector was the very strong demand for dairy and arable properties, or those capable of dairy support operations, which led to a substantial increase in rural land values for these farm types," Sir Selwyn said.
"For us, this translated into a financial year of strong growth in the value of the [trust's] farm properties and a significant increase in returns from their directly managed dairy farms."
According to the Real Estate Institute of New Zealand, 601 farms were sold during the three months to July, down from 711 in the period to June.
The median farm price in the period to July was down slightly at $1.8 million but was up 41.7 per cent on the previous year.
The dairy farm median price was $4.2 million, up from $4 million in the period to June.
The rural sector had been affected during the year by drought and rapidly rising costs but the outlook remained very encouraging, Sir Selwyn said.
"We see continuing strong dairy product and arable crop prices as well as improving sheep and beef product prices," he said.
"Combined with the recent decline in the exchange rate for the New Zealand dollar, there are positive signs for the year ahead."
A PricewaterhouseCoopers report commissioned by Rural Equities about three years ago showed a five-year average rise in property value of 23 per cent - a trend Sir Selwyn said had continued.
He said property prices will continue to rise if commodity prices keep trending the way they were and there was variation in land use. The result would be an associated rise in the price of food.
