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Farm manager looks east in search of fertile investment
Britain’s biggest farm management company is branching out into agricultural investment in Romania, believing eastern Europe offers far more fertile opportunities than those at home. The privately owned Velcourt, which manages 50,400 hectares of arable and dairy farms in the UK for 81 clients, has set up a joint-venture with Mintridge International, a farmland acquisition company focused on Poland and Romania. The pair plan to tap into resurgent demand for farming investment, boosted by rising food prices, that cannot be met by opportunities in Britain. “The UK farmland market is very mature and illiquid,” said Velcourt chief executive James Townshend. “Less than 0.5pc of UK farmland is sold in any one year, so opportunities are very limited and yields are only 1pc-2pc.” Mr Townshend, who has been with Velcourt for 35 years, is married to Charlotte Townshend – one of the UK’s wealthiest landowners, whose estate includes 40 acres around London’s Holland Park and Chesil Beach in Dorset. She has an estimated fortune of about £300m, and is the only person in Britain apart from the Queen who is entitled to own swans. Mr Townshend said he saw “double digit” returns in Romania both from the farming operations and the uplift in land prices. “We’ll get the returns in two ways,” he said. “We’ll ramp up productivity and reduce costs and there’s potential for very profitable agricultural operations with good soil quality. “Then there’s the land arbitrage. Consolidating a large number of indigenous landowners with small plots into one larger block with proper irrigation and crop storage will increase land values, which will rise anyway over time.” He believed that “over six or seven years”, the value of Romanian farmland could rise from the current €2,700 (£2.365) per hectare to Poland’s average of €6,500 to €7,000. “In East Anglia it’s €30,000 a hectare,” said Mr Townshend, noting UK farmland was “fully priced”. The new Bucharest-based joint-venture company, Velcourt SRL, has modelled an initial €14m investment that is targeting an 18.7pc return. It envisages buying 4,450 hectares, each at €2,700 or less, and improving irrigation and storage. By the time an investor exits eight years later, Velcourt envisages land values will have risen to €9,500 per hectare. The model assumes drought in years two and five. Mr Townshend said land had been identified, with a typical investor likely to be “family offices or private equity”. Velcourt is also the UK’s largest manager of dairy farms, spanning 10 businesses and 5,000 cows. But it will focus on arable farming in Romania, notably maize, wheat, sunflowers and oilseed rape. Velcourt was formed in 1967 and made pre-tax profits of £4.56m in 2011 – its latest accounts – on sales of £35.3m. It takes a share of the profits of the farms it manages, whose collective turnover would be close to £100m. Mr Townshend owns more than 20pc of the business. The company has previously invested in Russia, though returns were hit by the collapse of Lehman Brothers in 2008, which knocked asset values everywhere. “Demand for farm investment is not back to 2008 levels but it is getting there,” Mr Townshend said, noting that “there are a number of vehicles in the offing” aimed at agricultural investors. That is on top of established ventures such as Rabo Farm – a subsidiary of Rabobank. He said Velcourt could “take a 10pc stake in the initial investment” in Romania but would not be drawn on whether his wife would invest. “That would be a decision for her,” he said. Continue reading
Another clean sweep for Emaar Properties
Another clean sweep for Emaar Properties Muzaffar Rizvi / 21 April 2013 Just a week after its last sell-out property launch, Emaar Properties again sold off all available property in the first phase of another flagship mega-development project in a matter of hours. Hundreds of prospective buyers, who secured online registration on Wednesday to attempt to purchase a 1-, 2- or 3-bedroom luxury Burj Vista apartment, lined up outside the sales centre at Emaar Square in Downtown Dubai on Saturday to complete the sale deed for one of the apartments, expected to finish by June 2017. Online registration for the Burj Vista properties closed within about half an hour when it commenced at 9am on Wednesday. Emaar officials were not available for comment, but according to sources, Emaar on Saturday sold up to 400 apartments at an average price of Dh2,000 per square foot in the twin-tower project, which has over 640 luxury units in 20- and 65-storey architectural masterpiece located along Downtown Dubai’s Mohammed Bin Rashid Boulevard. The spacious development in the neighbourhood of the world’s tallest tower, the Burj Khalifa, attracted locals, and investors from Kuwait, Saudi Arabia, Egypt, Syria, Lebanon, India and Pakistan, among others. “Although the demand for luxury apartments is high and investors are queued, the property developer is not in a mood to cash in on the project in the wake of strong recovery in real estate market,” sources said. The registered broker said Emaar held back “a sizeable stock” in the twin-tower project and would complete the sale process in due course. “The property developer (did) not release all stocks in the Burj Vista on launch day and will complete the sale in different phases,” the source said. The property developer conducted Saturday’s sale in a much more disciplined way compared to last week, when police were called in to calm the frenzied queue of hundreds hoping to invest in the Mira Villa project in Reem district. Property brokers and market players believe that Emaar is expected to follow the same procedure and offer future projects on a first-registered and first-served basis to avoid any inconvenience to buyers. Payment installments The registered real estate agents said buyers would have to ensure 15 per cent down payment, and pay the remainder in eight installments by June 2017, with the next payment by September, then further installments in 2014 and 2015. “The final phase payment plan includes 10 per cent in March 2016 and 15 per cent in November 2016 and the last installment of 15 per cent should be made on completion in June 2017,” a real estate broker said. Burj Vista is Emaar’s fifth property launch this year, following Mira Townhouses in Reem district, and three other projects in Downtown Dubai, including The Address The BLVD, The Address Residence Fountain Views and The Address Residence Sky View. High demand As the property sector witnesses brisk activity this year, many new developments from reputable groups like Emaar and Damac are selling out on launch day. “In the first quarter of 2013, Dubai witnessed a boom in the economic activity and tourism resulting in substantial demand for luxurious apartments and luxurious serviced apartments,” Dubai-based Star Group Real Estate CEO Ravi Chawla told Khaleej Times. “As a result of the recovery on the economic front, major developers like Emaar and Damac have announced numerous luxurious serviced developments, which were completely sold out within 24 to 48 hours from the day of launch,” he said. The main factor for high demand of luxury apartments in Dubai was price, Chawla said. Even though the prices had risen, the luxury apartments — all finished to a “very high standard” — were still cheap by overseas standards, he said. “A 2 or 3-bedroom luxurious apartment in Dubai is probably double that of its equivalent in London, Singapore or Hong Kong. The Gulf market has always priced well-finished properties at a premium,” he said, adding that the demand for luxury apartments in Dubai seemed brighter in 2013-14. “We are seeing a lot of people migrating to Dubai for long-term homes as investments.” “The reputation of Dubai property has been growing internationally as a majority of buyers is from the UK, Kuwait, Saudi Arabia, Iran, Russia, India, Pakistan and other European countries. This wave of overseas buying is for both investment and lifestyle reasons. The tax-free structure is also one of the key driving factors,” Chawla concluded. muzaffarrizvi@khaleejtimes.com Continue reading
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