THE real estate industry is rapidly embracing online auctions, given Prime Minister Scott Morrison’s announcement last week that traditional public auction gatherings and ‘open houses’ will cease under COVID-19 control measures.
The rural property market is no different, with a number of online auctions scheduled last week, for the months ahead.
Agents say there has so far been no real ‘drift’ away from the auction process towards expressions of interest or other selling options, among those vendors who were in support of the auction process.
Using the online channel to market rural property first emerged in 2015-16, with a number of such auctions held successfully.
While property ‘open houses’ have been discontinued under the Federal Government’s latest COVID-19 disease control measures, these are rarely if ever used for rural property assets. Private property inspections can continue, under certain strict guidelines:
- Social distancing laws now limit public gatherings to two people. The potential buyer, agent and property vendor can no longer conduct a property inspection in the same vehicle, but would have to travel in convoy, in separate vehicles, communicating either by two-way, or vocal communication at a distance.
- Interstate inspections are not possible under current regulations regarding crossing state or territory borders, without going into quarantine.
This week, a number of industry experts remained upbeat about the rural property market under the shadow of COVID-19.
Danny Thomas – CBRE Agribusiness
Despite the current market conditions, Danny Thomas, regional director of CBRE Agribusiness, said his agency was continuing to field inquiry for most classes of property.
“Some deals are in due diligence or the final stages where foreign buyers have asked for more time, in order to get internal investment committee approvals because they are working from home. No deals have fallen over, and domestic demand continues to remain strong – as far as we can tell – based on inquiry.”
Mr Thomas said the only caveat on that would be any change in bank sentiment that might influence the market.
“The market is not telling us that attitudes to buying agricultural properties or agribusinesses have changed. While the situation could deteriorate with a tightening of credit, there is a lot of government stimulus being injected into the economy.”
After Easter, Mr Thomas said CBRE planned to launch a couple of hundred million dollars’ worth of assets to the market.
“The scale of these properties means they will not be auctioned. CBRE wants to embrace participation by foreign investors who can’t participate at auction, as they don’t have FIRB approval.”
In the spring selling season, CBRE will further offer a suite of properties to the market via online auction.
Some of those will utilise virtual inspections.
“In terms of physical inspections, we will be convoying people in cars behind us. CBRE will be more creative in terms of the way it does marketing, and buyers and sellers will come to terms with how to do that. In the end, buyers who want to buy will buy, and sellers who want to sell will sell.”
Advice to sellers
Mr Thomas urged potential vendors to talk to their agents and seek advice about what the sentiment is in their specific market.
“Ask the agents to name who the active buyers are – put them through the hoops and make sure there are real buyers in the market. If there are buyers who are happy to participate off-market (for instance, a domestic seller who doesn’t need FIRB approval) and they are at a level of value which satisfies the vendor, then do the deal.”
Chris Holgar – JLL Agribusiness
JLL has been forced to change some sales processes and move proposed auctions to online this month.
In Queensland, the Arcadia Valley’s 3560ha Leeora Downs and Muttaburra’s 62,805ha Bowen Downs were always being auctioned, but given the current restrictions around coronavirus, they have been moved to the online platform.
Likewise, the 2674ha fattening and backgrounding enterprise Bellevue near Tara will be auctioned online on April 15.
Agribusiness director Chris Holgar said the above listings were generating good inquiry and there are two new prospects on the horizon.
“People are still willing to move ahead, which shows the resilience of the agricultural markets – the fact that it has been deemed an essential service also helps.”
“At this stage, there is little impact on the number of properties coming to market. Further travel restrictions and a full lock-down could put listings and sales on hold, but at this stage it is business as usual,” he said.
In fact, Mr Holgar doesn’t believe the situation will change unless agents are restricted further in their ability to move around.
“For most people, both buyers and sellers, it is very much business as usual within the confines of the current travel restrictions, and what we can and can’t do as an industry in regard to selling real estate.”
He said rural inspections would continue on a one-to-one basis.
“We will use separate vehicles and adhere to the social distancing requirements. It is important to remember that the market fundamentals are good, there is pent up demand and at some point in time, this will all come to an end.”
In the current climate, Mr Holgar said it was important to identify target buyers and the target market.
“The method of sale needs to be assessed for properties that will genuinely generate interest. If an online auction is not appropriate, then an Expressions of Interest campaign should be examined.”
“It is essential to have an appropriate amount of data for the asset – information and photos to provide to a potential buyer restricted by their ability to inspect,” Mr Holgar said.
Bruce Gunning – Ray White Rural International principal
One of Australia’s best-known rural property agents admitted there was a reluctance by some people who have their properties currently listed, or are in the process of listing, to proceed with a marketing campaign in the current climate.
Bruce Gunning, the principal of Ray White Rural International, said most potential sellers are saying this is not the right environment to be selling their property.
“The circumstances of discussing a property and inspecting a property have become very difficult. I’m not saying buying and selling will stop because RWR has an online auction platform (see references in tonight’s second story), but people who were undecided are unlikely to list in the current environment.”
Mr Gunning said the COVID-19 restrictions mad it difficult to arrange property inspections, particularly when dealing with interested parties from interstate.
“For instance, if a potential buyer from New South Wales wanted to inspect a Queensland property, they would need to navigate two-week quarantine timelines by their respective state governments. Therefore, I believe the number of property sales going forward will be reduced.”
Mr Gunning is currently dealing with a handful of owners, trying to come up with the most appropriate way of marketing their properties.
“What we are doing is providing potential buyers with plenty of information, including a property’s production and rainfall figures, its financials, areas of cultivation, density of timber and stocking rates.”
“Some buyers may not require an inspection if a property is identified well enough. Others may be prepared to make an offer subject to an inspection down the track, causing a vendor to postpone a sale until the restrictions are lifted,” Mr Gunning said.
However, Mr Gunning acknowledged that vendors who choose to sell in the current market would be given more exposure because there was pent-up demand and supply was low.
“I would encourage those people to take plenty of photos and conduct a virtual inspection. Every circumstance will cause people to think differently and it is going to change, it is going to be harder, but it’s not going to stop properties from being transacted.”