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Just look who's buying farms these days

13 Jan 2006
Commercial farmers are being blamed by politicians and the landless alike for supposedly inflating the prices of farms in an attempt to counter land reforms. They are also accused of being slow to participate in black economic empowerment in the agricultural sector. However, real estate agents have a different view.

According to Mr Jan Viljoen, owner of Fine & Country Farms & Lodges in Gauteng, seven out of ten farms sold by him is bought by business people who see an opportunity in agriculture. Viljoen's firm specialises in marketing prime farming properties.

Advertising in Landbouweekblad, he offers farms from a 'mere' R1,93 million for a 199 hectare wildlife farm in Roedtan, to an incredible R45 million for a property of 970 hectares with wildlife and conference facilities in the Potgietersrus district. "In fact, I'm just on my way to the airport to meet a Cape business person ready to invest R5 million in a local piece of farm land. We are also currently negotiating the sale of a wildlife farm project for R120 million," he boasts.

Mr Frik de Jager, head of CMW's property division in Port Elizabeth that deals in the marketing of farms country wide, confirms this. "Only five in every ten farms sold by us are bought by commercial farmers. One in ten are sold to black farmers, and the remaining 40% are bought by business people.

"Although the latter certainly invests in lifestyle as well, they no longer do so only for the pleasure of having a weekend play pen. Business people buying farms now believe that farms should also provide some form of income, even if it is simply a matter of keeping wildlife.

"Some of the factors contributing to the fact that agricultural land is sought-after among local investors include a general sense of trust in South Africa's future, low interest rates and the fact that these days investments in agricultural land yield a higher return than residential property," says De Jager.

"However, the Minister of Agriculture's comments about foreign ownership of land in South Africa has caused many overseas buyers to disappear overnight," he adds. The strong rand also played a role, but statements by politicians have certainly done a good job of scaring buyers away. One American who was about to buy a Karoo farm pulled out immediately after hearing comments by Thoko Didiza.

Land prices have increased by 15% on average over the past five years, and even smaller white farmers find it hard to afford land. "The only people who can afford to buy land are those who managed to sell their existing land to a black farmer. Still, some commercial farmers own large tracts of land, and some are expanding by buying neighbouring farms as they become available in the market.

"Many bigger farmers are concerned, however, that they may be targeted by government for expropriation of a section of their land unless they participate in black economic empowerment. One of my clients own 17 farms but recently asked me to sell three of them."

According to De Jager it is inevitable that more black farmers become farm owners. "White farmers still have the opportunity to get involved in the process on their own terms. The longer white farmers delay, the worse their bargaining power becomes."

He mentions schemes such as LRAD which are designed to empower farm workers, which can be beneficial for both parties. "However, the accusation that commercial farmers deliberately hike prices in a bid to avoid black farmers from buying farms, is complete rubbish. In truth, not enough money is available for this purpose. Furthermore, there is a lack of capacity and competence within the Department of Agriculture and Land Affairs to carry through transactions."

According to Mr Jan Badenhorst, consultant of Pam Golding Agricultural Properties in Bethlehem, the Eastern Free State has become the playpen of Gautengers. "These days people who buy farms and smaller holdings in this region are mostly professional people who yearn for peace and quiet. Many of them also open businesses and breathe new life into the platteland. Erven in Rosendal, Clarens, Senekal, Fouriesburg and Paul Roux are all becoming more expensive."

It would seem that the Department of Land Affairs is getting its house in order, he says, as many farms are now being bought by black farmers. Recently two Zimbabweans (one white and one black) also bought farms in the region. Even Germans and Americans regard the Eastern Free State as a safe investment because of the general lack of land claims in the region, says Badenhorst.

The prices of farms in his region vary between R3 000 and R3 500 per hectare for arable land, and between R1 000 and R1 800 per hectare for livestock farms, with or without infrastructure.

According to Viljoen, although the high crime rate is deterrent to investors, his company is actively involved in marketing farm properties abroad. "I find it sad that the government does not use this opportunity to buy available land for upcoming black farmers. It is time we realise that 'white' or 'black' is not all bad for South Africa. When everyone makes an effort, we can ensure more accessible land ownership for all the inhabitants of this country."

According to De Jager, there has never been such a good time to invest in agricultural land. The land can only increase in value. "Although there is a degree of uncertainty, it must be remembered that agriculture has always been associated with uncertainty. As long as farmers are pro-active, everything will be all right," he says. Theuns Botha

Article courtesy of Landbouweekblad.
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