THE imposition of the lockdown due to Covid-19 has had a dire impact on farms with many going up for auction as owners battle to survive.
In addition, the subsequent ban on the sale of alcohol has crippled wine farms, with at least three being auctioned this month alone.
Property group Knight Frank will on August 31 conclude its first sealed bid auction of farming properties since the start of the lockdown. Three table grape farms in Vanrhynsdorp and the Worcester district are up for auction.
Knight Frank managing director Susan Turner said: “Commercial wine estates have been severely impacted by the ban on alcohol and the lockdown.
“We haven’t seen any transactions of those farms, but I’d imagine there are some that would be traded under distressed circumstances (in the future). We have farms that have secured lending debt, debt to the banks, and those farms require the revenue generated by the sale of their wine to service that debt, and some are going to struggle to service that debt and come under pressure from the bank to liquidate the asset or make a plan.”
The real impact of Covid-19 on the commercial farming property market will only be known in a few months as the Cape Town Deeds Office reopens.
It was closed for most of the lockdown, meaning data of farm sales and ownership transfers is not up to date.
Chairperson of Agri Development Solutions, Johann Bornman, said: “The lockdown had a huge impact on the Deeds Office in the Western Cape and if you look at the number of transactions recorded between April and July, there were only four for the province.”
He said the four farms would have been up for sale before the lockdown came into effect and could not be an indication either way of a trend in commercial farm sales.
“Historically, there’s an average of 314 transactions (farm sales) for the first seven months of a year when looking from 2015-2019. For January to March in this period, the average is 127. The first three months of this year, 102 farms changed hands, so there’s a little bit of a downward trend.”
Agricultural specialist for Harcourts Winelands, James Visser, said he was optimistic about one part of the market. “There’s been an uptick in the market in terms of smaller lifestyle farms,” he said.