Agricultural zoning restricts market

There has been a shift in the sale of farms in the Western Cape from commercial farms to lifestyle farms, as a result of commercial farming not being as being as profitable as it were in the past.

"This trend has been noticeable for some time and we are very optimistic about this emerging sector in the market," says Jan Hofmeyr, the Manager of Rawson's Agricultural Division.

He explains that many buyers of agricultural land are interested in the lifestyle it awards them and they prefer getting out of the cities and enjoying the open spaces of the countryside. This has resulted in many buyers looking at buying farms in groups, in order to give a few families the opportunity to live on one farm. "This offers security, as there are a few families living close together, as well as making the venture more affordable as they are sharing the purchase price."

However, the strict Agriculture Law still being enforced on the sale of land zoned for Agricultural purposes is restricting growth in this market segment. "The law specifies that land zoned as agricultural land, is not allowed to have more than two main houses on one farm. You need special permission to subdivide land and this is very difficult to obtain."

Although Hofmeyr agrees that it is important to zone land in order to protect the environment, he feels that there are many farms currently falling under these laws, that cannot be farmed profitably and the law therefore renders this land useless. "Restricting the use of this land to agricultural purposes is wasteful, as these farms can be subdivided or used for guest farms, resulting in job creation."

An alternative to subdividing farms, currently used in foreign countries, is to make use of a principle called "buying footprints". Similar to Shareblock Schemes, a group of buyers buy shares in the farm, instead of buying the property. This means that they do not actually own the farm, but own shares in the farm. "The farm is therefore still run as a commercial farm and making a profit, the only difference is that there are a number of families living on the farm". Hofmeyr hopes that this will also be the future direction of the South African Agricultural market.

The uncertainty of the status of the foreign ownership of land has also lead to a decline in foreign interest in South African farms. Hofmeyr feels that South Africans have the wrong perception when it comes to foreign ownership of farms in the country. "Foreigners are proud of the investment they make and many of them restore historic farms to their former splendour, as they have the money available to afford the renovations. Many of them only live here for a few months in the year, which means that they have to hire staff to look after the farm on their behalf, which leads to job creation."

For more information on agricultural property matters, visit www.agritv.co.za.