In the first few months of this year, more than 150ha of land changed hands for orchard development and land prices have risen 25% to 30% over the past two years.
Cromwell PGG Wrightson Real Estate branch manager Neil Bulling said enthusiasm for the crop showed no sign of slowing down, despite a tough 2017-18 summer: “This summer was the hottest on record, bringing the harvest forward, putting pressure on packhouses and resulting in smaller, softer fruit. That said, for the past few years plenty of people have been keen to grow cherries, and one challenging season has not dampened that enthusiasm.”
Mr Bulling said existing developed orchards found willing buyers at a value of more than $500,000 per hectare. However, owners were reluctant to sell. Investors usually bought bare land, as suitable blocks sold at about $100,000/ha and if they had a good water supply were ideal for growing cherries. But establishing a cherry orchard requires great care.
“If you might spend $100,000 per hectare to purchase the bare land, you need to budget another $120,000 per hectare to develop the orchard, in stages. Then, once you are producing cherries, an average orchard might net $50,000/ha per annum, while those that are more productive will make $70,000 to $80,000. That justifies the $500,000/ha value you would expect to pay for a producing cherry orchard.”