Why Are There Not More Farmland REITs in Australia?

REITs are a highly regulated but tax-efficient method for investors to hold real estate. They are permitted to hold farmland as well as residential and commercial property and other real estate assets, including farmland F-REITs. However, despite the importance of agriculture for Australia and the size of Australian farmland there has only ever been one F-REIT, Rural Funds Group (ASX - RFF). The explanation lies in a combination of factors, including the availability of alternative investment vehicles, barriers to entry including capital market constraints and limited quantities of suitable farmland available for sale and a decline in investor interest in REITs overall. As a result, RFF is likely to continue to enjoy its unique offering to investors.