(Resource News International) — Upheaval in the global financial markets over the past month hasn’t caused any significant damage to the demand for agricultural land in Western Canada, according to farmland real-estate sources.
However, willing sellers are becoming harder to find, as many landowners are looking at their land as a relatively secure investment in a time of economic uncertainty.
“We’ve definitely noticed the reluctance of some farmers, who were thinking of selling, to part with their land,” said Chris Classens of InfoMarket Group GMAC Real Estate in Alberta. “They’re saying that ‘the land will always be there, but look at the stock market and everything else,'” he said.
While sellers were becoming more reluctant, the global financial crisis had not yet hurt the demand for farmland, he said.
“We have lots of buyers,” Classens said, adding there are also still investors looking at moving their money out of the stock market and into farmland.
In addition, “the banks are still aggressively lending money in agriculture,” he said, noting interested buyers were not running into problems securing credit.
Grain prices have come down from their highs seen earlier this year, taking some of the optimism out of the agricultural sector. However, “even if grain prices stay at the level they’re at now, there’s still some pretty good money to be made in agriculture,” said Classens.
“In essence, it’s still fairly strong,” said Maurice Torr, ag sales specialist with Century 21 West-Man Realty in Manitoba, on the state of the western Canadian agricultural real estate market.
However, Torr didn’t think the agricultural sector would be able to escape unscathed from the current economic crisis, and expected farmland values would eventually level off or possibly come down.
On the other hand, he also thought farmland would hold up considerably better than the residential sector. “The one thing about land is it always seems to hold its value,” he added.
Torr agreed with Classens that availability of land for sale was tighter than normal. Those people holding off for higher values may need to adjust their expectations, he suggested.