Getting Invested in Canadian Farmland

Posted in: Global Ag     

0514 Wealthy Farmer

One Saskatchewan real estate expert dissects a trend that’s shaping the future of farmland values

One of the largest changes in agriculture today is the emergence of non-farming investors purchasing farmland.

Just a few years ago almost 100 percent of the land was owned by producers — this is not the case today.

Of the 40 people in my Yorkton, Saskatchewan-based brokerage, nine of them are organized into an Ag Team geared to selling farmland.

In the past year, 71 percent of my personal sales can be attributed to investors, although this number varies across the team. On average, half the clients are investors, the other half are producers.

Here’s a quick look at the breakdown of my client base: 

  • Small, local (typically Saskatchewan) buyers who are looking to pick up a few quarters in place of stocks or other investments. A few of these local customers buy substantial amounts of land, but they are not the norm.

  • Out-of-province buyers who typically follow the same patterns as those who listed above from Saskatchewan.

  • Investor groups who typically purchase larger blocks of land. Most of these groups are renting their land to local producers — although we’re seeing some new trends, for example, where the buyer partners with a local producer who purchases a smaller portion of the land with the investment group.
  • Out-of- country buyers who are Canadian citizens. These are seen on occasion. Typically they are interested in larger blocks, but that is not always the case. Of course, many of those listed in the first two groups are often new residents of Canada. As a side note, the greatest number of buyers in this group are Chinese.

 

This influx of outside investors has sparked a new practice in my business: the use of UAVs, or Unmanned Aerial Vehicles, to adequately ‘show’ my properties.

If an out-of-town buyer is interested in one of my listings, I use UAVs to provide them with a bird’s eye view of the land — often better than if they’d just seen it from the ground.

The drone carries a GoPro 1080p HD camera and captures video footage as it flies over the land.

Then, we send the video to the client so they can see the land in great detail, even if they are not there in person. Out drone can fly approximately 2km so a full section can easily be flown over from one position.

On another note, in relation to our out-of-town customers, many farmers ask me about the federal legislation that governs foreign purchases of Canadian farmland.

Here’s how it works: Federal law states that you need to be a Canadian Citizen or a Canadian resident to own more than 10 acres of farmland in Canada. In other words, all out-of-country buyers must be Canadian citizens.

Many producers fear a quick influx of investors into the buying pool, while others are getting on board and partnering with them to help the grow their farms when they are undercapitalized or when they want to mitigate their risk.

Whatever strategy you choose, ultimately this growing interest from outside investors is a bullish sign about Canadian agriculture — and that’s good news for every one of us.

 

You may be interested on Bird's Eye View story of our June 2014 issue

About the Author
Ted Cawkwell

Ted Cawkwell is an Agriculture specialist with Remax Blue Chip Realty in Saskatchewan. He can be reached at 306-327-7661 or ted@tedcawkwell.com.


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