KZN FARM SALES NEWSLETTER FEBRUARY 2010

2010 is here !

The start of the year was marked by renewed activity in the agricultural and lifestyle property market with several transactions indicating confidence in property sector.

Quality lifestyle properties in the Midlands are generally in short supply although there is a lot of stock in the R2-R4 million category which has not moved due to over-pricing. Many of these properties would sell if the Sellers took a more realistic view of the value of their properties. For instance - a property came on the market just outside Howick at R2.9 million. Being overpriced there was not much interest shown by potential purchasers and the seller quickly realized that in order to realize a sale he would have to adjust his price. The property was reduced and genuine interest led to a sale shortly thereafter at R2.2 million – fair value in the current economy.

There is still demand for grazing farms with several trading hands at prices not seen before in the midlands – there being no relationship between returns from cattle farming and land prices. This indicates the premium that buyers are prepared to pay for lifestyle farming operations but transactions of this nature are fortuitous to say the least.

Land claims and resident labour with tenant rights remain serious inhibitants for buyers and properties with these problems usually have to drop their price 10-20% to effect a sale.

We have had a good season as far as rainfall is concerned so farmers can look forward to good yields and plenty of grass.

Other transactions recently concluded are a 20ha smallholding at Manderston (near Pmb) with a good home for R2,7m, 14ha (Pmb)with reasonable home, cottage and shedding for R2m, 479ha veld farm (unimproved) near Boston for R1,45m, 200ha maize and veld farm in Mooi River for R3,5m, 10ha in Balgowan on the Meander with home for R2,35m, 29ha at Mount West with big house (needed repairs) at R4,4m. Sales at Mt Verde in Hilton have been fairly brisk indicating that the top of the market have not been affected by the recession.

51 transfers were recorded in December, with 106 properties changing hands in November and December (Registration District FT only). This indicates that approximately 50 properties are being sold on a monthly basis in one registration district alone which certainly points to an improved market.

The Natal Midlands has always proved an excellent destination for property investment and some innovative new ways of marketing rights in lifestyle properties, namely fractionalizing or shareblocking property are being looked at to bring down the entry level of investors in the Midlands. To this end the estate “Riverdale” are selling 13 shares in their upmarket lodge at R450 00 per share and R250 000 per share in the fishing cottage – the property sports tennis, horseriding trout fishing and hiking / forest trails.