In Focus – McGrath Upper Hunter
This month, we talked with McGrath Upper Hunter Managing Principal Michael Burke about interest in his local market.
Australia’s commitment to net zero emissions by 2050 has added further competition to the rural property market. Traditional farming and grazing operators are vying for land assets alongside stakeholders cashing-in on carbon credits, biodiversity offsets and renewable energy projects.
Biodiversity Offsets and Carbon Farming is ‘a controversial topic that has the capacity to split communities’, said McGrath Upper Hunter Managing Principal Michael Burke. But it’s a discussion that’s gaining traction as the vagaries of weather – El Nino is again forecast for eastern states - change the appearance of landscapes and commodity prices soften.
Servicing a marketplace that extends from the Upper Hunter Valley and through to the New England of New South Wales, McGrath Upper Hunter is sought-after for divestments in grazing properties, broad acre farm sales and equine property assets (soil content and topography around Scone has positioned the area as the most productive and successful thoroughbred breeding region in the Southern Hemisphere.)
But Burke, the NSW Real Estate Institute of Australia’s Rural Marketer of the Year, has also been engaged for the sale of multiple rural assets for biodiversity purposes and carbon farming over the last year.
With the development of a national carbon exchange, big polluters needing to meet Government-mandated baseline reduction targets and public companies looking to promote their ESG credentials, the nation’s $4.5bn carbon farming will increase demand for non-traditional farming purchases, adding a new dimension to rural markets over the next decade.
“Whilst we are not advocating for carbon farming or biodiversity offsets in prime rural areas, it has become another increasingly prominent sector within the rural property marketplace” said Mr Burke.
“It’s extremely difficult to restore land to grazing and other traditional farming purposes following activities for biodiversity and carbon capture. Rural communities have a similar challenge with farmland being converted for renewables.
“But demand for these purposes is increasing and, in some markets, premiums of 20% have been paid for carbon or biodiversity purposes.
“Along with livestock prices, interest rates and a very dry first half of the year, our role on behalf of our clients is to maximise their sale results should they choose to divest what is, in a lot of cases, their major asset - the family farm. This puts us, as selling agents, in a position where we need to explore the best possible buyer for the property and increasingly these are being sourced from alternate, non-traditional sectors.”
The Clean Energy Regulator, on behalf of the Australian Government, has so far contracted 217 million tons for carbon abatement projects over 15 auctions. About 70% of contracts have been for vegetation, with agriculture accounting for less than seven percent.
“As rural specialists, we’re helping owners navigate through the transition and understand the different factors at play,” said Burke. “It’s a growing market but very complex and owners need to understand the implications of sales and leases in this sector.”
Whilst the season and markets have slowed down, the past 12 months for the McGrath rural team in the Upper Hunter has seen sales records tumble. This has also been a trend reflected within other branches of the wider McGrath Rural and Livestock group - a very positive sign as the McGrath network continues to grow, taking a larger position within the rural property marketing sector.