Rural investment specialist, MyFarm has seen a dramatic increase in kiwi investors looking for exposure to the primary sector and regular cash returns.
MyFarm head of sales, Grant Payton says rapidly building demand for horticultural investments has seen MyFarm raise $102 million of investor equity since April this year. That is double the average annual investor equity it raised between 2016 and 2018 ($46million).
MyFarm, which was established in 1990, began offering exposure to horticultural assets in 2015. It partners with experienced operators in key sectors to put together investments in vineyards, apples, kiwifruit, hops, manuka honey, cherries and commercial property. Most proposals are structured with a lease model which provides the investors a regular return through rental payments.
The 11 MyFarm syndicates established between April and November this year included six kiwifruit orchards, two vineyards, two commercial properties, a Manuka plantation and a hop garden development. Of the total 824 transactions, 70% were by repeat investors at an average investment of $124,000.
MyFarm head of sales Grant Payton says MyFarm's most recent gold kiwifruit orchard investment, Otamarakau a 13.3 hectare, $18.45 million Bay of Plenty orchard was fully subscribed within four days.
"The record low interest rate environment is one of the key factors for investors decision to diversify into horticulture. I think there is also much wider recognition now amongst the investing community that our primary sector is performing really well in a Covid-19 world and can deliver regular, steady returns."
In the 2019/2020 financial years MyFarm investments generated an average annual cash return to investors of 8% p.a.
Payton says investors are not just motivated by the returns. Many are attracted to the environmental or social aspect of the offers. In September investors were quick to take up the offer to purchase a $17.10 million vineyard worker accommodation facility that houses 356 RSE workers. The income these workers earn in the Marlborough vineyard sector is estimated to benefit 10,000 family members back in the Pacific Islands.
"We had a number of our investors say it made them feel good to be indirectly supporting these hard-working people who provide such a crucial service to NZ horticulture. They like the fact that through our investments they are contributing to successful, productive New Zealand businesses that will drive our economic prosperity."