Thursday, March 28, 2024

Forests push up farm prices

Neal Wallace
The median price of forestry land has increased 45% in the last year, driven by Government incentives to plant trees, according to the Real Estate Institute.
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It also says those incentives and subsequent increase in prices underpin renewed interest in grazing land for conversion to forestry, which concerns rural communities who fear a loss of jobs and services.

Institute data shows the national median price of forestry land has increased from $6487/ha to $9394/ha in the past year.

The greatest increase was in the North Island where it has almost doubled from $6656/ha to $13,128/ha while in the South Island prices have fallen 4%, from $6450/ha to $6162/ha.

The data reveals there were 70 sales in the year to the end April 2018 compared to 50 for the comparable 2019 period.

Institute chief executive Bindi Norwell said the reduction in sales might be because forestry is a desirable investment.

“Unsurprisingly, the number of forestry farms sold over the past year has fallen too, as investors are seeing forestry farms as a highly sought-after investment. “Those investors are holding on to their farms which is also contributing to the price rises.”

The institute is hearing of rural communities concerned about the impact of livestock farms converting to forestry.

“Feedback from farmers and rural salespeople around the country is increasingly one of concern with many saying that once beef or sheep farms have been converted to forestry they will never be converted back again because of the loss of infrastructure and the high barrier to entry should re-conversion be considered in the future.”

The latest land sale approvals from the Overseas Investment Office include Lone Star Farms selling a 1700ha Wairarapa farm to Austrian investor Veronika Leeb-Goess-Saurau for $13.4 million.

The agreement will see 1280ha planted in forestry this year with the rest sold and 20.5ha of native bush protected by a QEII covenant.

Three homes and other flat land will be subdivided and sold within three years.

The OIO said it assessed the sale agreement under the new rules governing foreign investment in forestry.

“Under the new forestry test the criteria include that the land must be used exclusively or nearly exclusively for forestry activities, not used for residential purposes, existing arrangements must be maintained or implemented and harvested trees must be replanted.”

It said Leeb-Goess-Saurau bought 381ha of land in Hawke’s Bay in 2016. It is now the Carlsberg Forest.

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