Despite the relentless drought and tough conditions, Australian-grown products such as beef, nuts and wool are in high global demand. As a result, farm investment opportunities across the country continue to attract investor groups looking to expand within the industry.
What farm investment opportunities are investors looking for?
Australian farmland is widely dispersed.
Large-scale properties, with high production abilities in reliable rainfall regions, are popular among commercial investor groups. Farms close to regional towns with strong water infrastructure are also drawing a crowd.
More conservative trends are seen in regions such as the north-west of New South Wales. Agents are finding that while inquiries are rolling in, owners and buyers alike are waiting for more favourable climate conditions before they consider selling or buying.
Experienced investors and farmers that are looking to develop their farming portfolio are taking a geographical approach. Expanding their portfolio across the country, rather than being localised, helps them spread their risk and be more sustainable against natural disasters.
3 key elements to look for in farm investment opportunities
1. Water infrastructure
The Australian climate can be unpredictable, so farm owners can’t rely solely on consistent rainfall to provide the large amount of water that they need.
Water infrastructure provides storage and distribution of water across the property. Dams, bores, tanks and irrigation systems are some key examples of the type of water infrastructure that farm investors are looking at.
2. Land quality
You can always change the farming infrastructure to suit your needs, but you can’t change the land.
When looking for the right farm, investors must make sure that the land is suited to the livestock or crops that it will hold and grow. Size and soil type are the determining factors for how the land can be used. It’s also important to test the land for any degenerative signs of erosion and contamination.
Every farm must be easily accessible to buyers and suppliers.
Before deciding whether to invest in a farm, investors need to do their research on where the farms sits on the map logistically. This is especially important for smaller farms, where getting trucks to the property can be costly if they are far away from the usual routes.
Depreciation available for farm investment properties
Both owners and tenants of farms used for income-producing purposes can boost their cashflow by claiming depreciation deductions.
Capital works deductions can be claimed for the wear and tear of structural assets, such as the farmhouse, sheds, and driveways. Plant and equipment deductions can be claimed for the easily removable items from the property such as tractors and tools.
Most assets found on a farm can be depreciated under normal depreciation principles. However, primary production depreciation assets such as water facilities, fencing, fodder storage and horticultural plants are depreciated using their own specific rulings.
For more information on how to claim the maximum depreciation deductions for your farm investment property, Request a Quote or contact the specialist BMT team on 1300 728 726.