Aug 25, 2008:
Demand for sugar cane farms and smallholdings in KwaZulu-Natal has all but dried up as buyers' interests shift increasingly to timber and dairy at the moment.
That's according to Barry James, co-owner of Homenet Agriplan, which specialises in farms and smallholdings in the Natal Midlands and along the KZN coast.
Despite the country's current economic downturn, James, who also heads up Homenet Howick and Homenet Nottingham Road, and his team have notched up some big ticket sales in recent weeks, most notably a dairy farm for R25m and a timber farm for R12m. The latter was sold to a buyer from the Eastern Cape, he says, adding that out-of-towners now form a major part of the buying pool in this sector.
According to James the most popular areas among buyers include Balgowan, Nottingham Road and Curry's Post. His reasoning for this is their central positioning on the Midlands Meander, their proximity to good schools and the opportunity they offer to people to share in a natural lifestyle.
Though his is not a cheap market – entry level is around R800k for a plot of bare land while a successful timber enterprise can cost up to R50m – James says many buyers are financing their purchases with cash and low, if any, bonds. This differs markedly from the transactions of previous years, which tended to comprise a large deposit and the balance in the form of a mortgage bond, he says.
This is not the only significant change to KZN's farm sales sector, he continues.
"Land claims are affecting our market far more negatively than the National Credit Act (NCA) or inflation. Nobody wants to buy properties with land claims attached to them, and even though the cut-off date for claims was 1998, they are still pouring in. KwaZulu-Natal seems to have the most claims of all the provinces, which is effectively discouraging investors. Rather than putting their money into an unknown quantity and an uncertain future, many are distancing themselves from the local market by investing in places like Mozambique."
Another feature of the current market is a marked lack of urgency to sell, which is why prices are holding, he says. "People are selling for the normal reasons such as retiring or relocating and not due to financial pressures or because they are emigrating."
Pat Acutt, spokesperson for the Acutts Real Estate Group, says game farm enquiries are leading the field at the moment, not least of all because it's "so much more difficult for stock thieves to steal fleet-footed animals".
Timber and dairy farming are also highly sought-after at the moment, he says, although the former industry was devastated by fire last year, putting the industry under major pressure as a result.
He sees the future of farming on the North Coast, however, as uncertain because of the mass of new development that has taken place there in recent years. "The North Coast is a major development node, so there are potentially a lot of farmers who are probably looking at alternative uses for their land as we speak, especially those affected by the closure of the sugar mill in Zululand. I wouldn't be surprised to see some of these farms being turned into townships in the not-too-distant future," says Acutt.