select
|

Rising interest in Eastern Cape farms

The worldwide economic recession has had a severe impact on farm sales countrywide, and the Eastern Cape’s farm sector has suffered accordingly. Gone are the days when buyers arrived with open cheque books and bought whatever they could.

“However,” reports John White, Pam Golding Properties’ farm agent in Grahamstown in the Eastern Cape, “This year (2012) has seen a significant increase in interest in farms, as compared to the previous two years, where interest in this sector was lacklustre. The difference now is that prospective buyers are now far more knowledgeable than in the past, and are not prepared to pay unrealistic prices.

“Although it is a buyer’s market at the moment, sellers have yet to adjust their prices to meet the current market conditions. As a result of this, properties are not moving as they should. This means that the financial resources of the sellers are still robust, and are not under pressure to sell.

“If the rand/dollar exchange rate weakens significantly, this could entice the overseas buyer back into the market. However, with South Africa in the global media spotlight of late for the wrong reasons, and pending legislation (Green Paper on Land Reform), I don’t anticipate the interest will be as significant as in the past.”

White says, interestingly, the profile of the farm buyer has changed radically. The main area of interest is among black buyers – mostly via the Department of Land Affairs - and middle class urban dwellers looking for a place in the country. The demand range for this group is mainly between R2 million and R5 million.

“They are looking for the largest piece of ground they can find within their budget, but find the properties too expensive, as the gap between buyer and seller is still too great,” he says. “Interest from black buyers has increased significantly this year, with most sourcing farms themselves. The Department then processes these applications. However, this process can take up to a year, or even longer.”

Commenting on the market in general, White says the demand for large farms is very limited, as it appears that buyers are not yet prepared to risk the sizeable capital outlay. “The financial position of stock farmers, at present, is positive. But with the limited number of good quality, developed stock farms on the market, buyers looking to acquire game farms for conversion to stock farms are not willing to pay the prices that game farmers seek. The cost of redeveloping these farms is prohibitive and it seems that sellers of game farms are not in the market aggressively as yet.

“We are also seeing quite a strong demand for farms from people wanting to relocate from other areas, where the government has purchased their existing farms. There is also demand from those wanting a lifestyle change, but this buyer seeks land close to towns or airports. The breadwinner in the family then commutes to major centres, such as in Gauteng, on business, while children attend schools in the vicinity and enjoy a more appealing lifestyle in rural environment. We have also found that a number of ‘lifestyle farm’ buyers have relocated to the Karoo, where they can purchase bigger farms with their budget,” he says.

Currently Pam Golding Properties has a broad spectrum of farms available. Game farms are plentiful, but costly at R10 000 plus per hectare, while good quality stock farms, crop farms and smallholdings are in short supply.  Key selling features are carrying capacity, location, and most importantly – security.

When looking to acquire farms for stock purposes, commercial farm buyers pay – on the LSU basis (Large Stock Unit, which equals 450kg of live weight): R15 000 per LSU for beef, R25 000 for sheep, R30 000 for goats and R40 000 for dairy cattle.

Adds White: “While interest in farms in the Eastern Cape has picked up, the gap between buyers and sellers has to narrow. Until then, activity will remain muted, although demand is there. Farmers need to moderate their expectations, and the buyers need to be willing to invest/risk more. A positive upturn in the economy has to occur before this will happen.”



  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 19 Feb 2018
      Possibly one of the biggest sources of contention between landlords and tenants surrounds the rental deposit. “Most tenants rely on getting their rental deposits back when moving, so that they can use it to pay a deposit on their new home. Having it withheld or even having large amounts deducted can lead to a lot of distress,” explains Bruce Swain, CEO of Leapfrog Property Group.
    • 19 Feb 2018
      Situated approximately halfway between Johannesburg and Pretoria, Midrand was established in 1981 and forms part of the City of Johannesburg Metropolitan Municipality. It has become one of the major business hubs in the country with major pharmaceutical, textile, telecommunication and motoring giants situated within its boundaries.
    • 19 Feb 2018
      The PayProp Rental Index Annual Review of 2017 shows that the rental market suffered from much volatility during the year. It kicked off with rental growth spiking in January with weighted year-on-year growth (YoY) growth peaking at 8.3% before dropping to 6.34% in July, dipping down to less than 5% in November and then experiencing a slight uptick at 5.75% in December.
    • 19 Feb 2018
      While most homes in cluster complexes, estates and other gated communities come with at least one garage or carport, residents would often like additional permanent parking or storage areas for things like trailers, bikes, boats and caravans.
    • 16 Feb 2018
      Whether you own a property in a sectional title complex or are looking to invest in one, the financial standing of the body corporate is the single most important thing that can affect your investment or your buying decision.
    • 15 Feb 2018
      One positive consequence of the financial crash in 2008 was the rise in consumerism, especially in the property market, where buyers have steadily become more knowledgeable and more value conscious.
    • 15 Feb 2018
      While most homeowners will take the agent’s commission into consideration when they are trying to determine what the will get out from the sale of their property, many often forget to factor in the other costs involved in a home sale, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 14 Feb 2018
      The forecast for the national rental market in 2018 remains a mixed bag of good news and bad news. Although rentals are expected to rise slowly as the challenges of home affordability and tighter lending criteria tighten their grip, it’s a double-edged sword as the market also will come under increasing pressure from factors like declining disposable income levels.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK