For immediate release
Unprecedented demand
and record prices continue to
characterize the market for Canadian farmland in 2012
Mississauga, ON (September 10, 2012) -- Soaring commodity values and
limited supply continue to push Canadian farmland values to new heights, with
price per acre now commanding top dollar in most markets across the country,
says RE/MAX.
The RE/MAX Market Trends
Report, Farm Edition 2012, highlighting trends and developments in 16 markets
throughout Canada, found that prices have increased almost across the board
this year with only the Annapolis Valley, parts of Windsor/Essex, and the
Fraser Valley reporting levels on par with 2011. Tight inventory has been an issue in all
markets, restricting year-over-year sales activity to a large extent. While low interest rates, high commodity
prices, and nutrient/supply management requirements have been the primary
factors fueling the trend toward expansion, increased advancement in farm
equipment has also been behind the push for additional acreage.
“The global desire to ‘bury
money in the ground’ is not without merit,” says Gurinder Sandhu, Executive
Vice President and Regional Director, RE/MAX Ontario-Atlantic Canada. “Investment funds are taking a hard look at
farmland as a result, with well-known asset managers calling farm
returns
among the best investments out there. And while this endorsement has attracted a
growing number of investors to the Canadian market, it has also provided little
incentive for farmers to sell productive farmland. In fact, the reverse is
true, with many looking to further amass parcels of land and expand existing
operations.”
Percentage increases in land
values—in some cases, close to doubling year over year—have not gone unnoticed. Price per acre this year ranges from as low
as $800 in Saskatchewan and Southern Alberta, to a high of $40,000 to $60,000
in the Fraser Valley, with Bruce/Grey/Huron, Kitchener-Waterloo,
Woodstock/Stratford, and London-St. Thomas chalking up some impressive gains over
last year’s figures. Some markets have
experienced multiple offers on farmland. Even south of the border, where
overall real estate prices have plummeted over the past five years, farm values
have steadily increased.
“Farmers have yet to be
deterred from expanding their operations, despite rising values and tight
supply,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada.
“Pent-up demand has been building, with some farmers making their move after
years of sitting on the fence, waiting for prices to correct. Most now believe that there is room for
further growth, given the upward momentum of commodity values.”
Poor crop yields elsewhere
have also served to accelerate demand for Canadian farmland. Weather has been instrumental, playing a
substantial role in driving wheat, corn, barley and other crop prices higher
this year—given extreme cold in some areas of Europe and hot and dry conditions
in South America and parts of the southern United States.
Lending institutions,
particularly those servicing the farming industry, are tuned into growing
global demand, so cash-crop farmers have had little issue with financing,
especially given today’s low interest rate environment. In some instances, banks are vying for
business. Financing is decidedly tighter
for non-supply managed operations, particularly beef and hog.
The RE/MAX Market Trends
Report, Farm Edition 2012 noted that population growth—forecast to outpace
increases in food production in years to come—would contribute to higher prices
moving forward. Ongoing urban sprawl is
also expected to drive price momentum, with workable farmland often worth only
a fraction of the same land’s development value. Weather, war, and other natural disasters
will also hamper existing production, making farmland an increasingly prized
asset.
Highlights
§ Cash-crop land remains most
sought-after, but a good market exists for poultry and dairy. In some markets, beef and hog operations have
been impacted by the high cost of feed and market prices, which has eased
demand somewhat.
§ Locals are driving the bulk
of sales across the country.
§ Investors account for a small
percentage of farmland buyers, but are a growing presence in the market, from
small, individual investors to wealthy business people and large
corporate/commercial investors.
Investors were noted in South Simcoe, Chatham/Kent, Woodstock/Stratford,
Windsor/Essex County, Bruce/Huron County, Southern Saskatchewan, Central
Alberta, and the Fraser Valley.
§ Some farmers are expanding
into less traditional markets, investing in and improving inferior
farmland. Others are enticed by value,
spurring migration to more affordable markets such as Grey County, New Liskeard,
Northern Alberta and Saskatchewan.
§ With private deals, exclusive
listings, auctions and tendering, it’s
clear that many properties never make it to the open market.
RE/MAX
is Canada’s leading real estate organization with nearly 18,900 sales associates
situated throughout its more than 720 independently-owned and operated offices
in Canada. The RE/MAX network, now in
its 38th year, is a global real estate system operating in 87
countries, with close to 6,300 independently-owned offices and over 87,700
member sales associates. RE/MAX realtors lead the industry in
professional designations, experience and production while providing real
estate services in residential, commercial, referral, and asset
management. For more information, visit: www.remax.ca.
For more
information:
Christine
Martysiewicz Eva
Blay/Charlene McAdam
RE/MAX
Ontario-Atlantic Canada Point
Blank Communications
905.542.2400 416.781.3911
