Boom time for ranch properties

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In his New Westminster, B.C., office, Rudy Nielsen has a Bowie knife stuck in his desk and a cow skull on the wall next to a photograph of John Wayne.

The knife embedded in the $140 desk is a reminder that a mere desk is nowhere near as important as real estate.

The former rancher, at one time the largest individual property owner in B.C., continues to sell ranch land and run a real estate analysis company after five decades in the business. The world’s wealthy are driving the market for ranches, and as a consequence, he’s never seen so much demand for ranch land in B.C. They’re motivated by escalating values, and also by the Yellowstone TV show phenomenon, about rich guys and their cattle.

“There are countries where you can’t buy that much land, but that’s why they are all buying here,” says Mr. Nielsen, who owns LandQuest realty firm and who keeps a database of all the province’s ranches. He bought his first ranch in 1972 and has personally owned six more working ranches.

“The prices ranches are going for are nuts – the highest I’ve seen in 50 years.”

A major driver, he says is global water shortages, and major amounts of water are needed to grow hay and alfalfa to feed cattle. He says it takes two tons of hay to feed a cow throughout the winter, which requires considerable land and water.

He believes the world’s wealthiest are circling their wagons around that land and water.

“The big boys with all that money, I think they see somewhere down the road, 20 or 30 years from now, we are going to have food shortages and we won’t have enough water to feed everybody.

“I’ve been saying for years that our land here in B.C. is very valuable because of our water.”

And even if the buyer turns out to be a lousy rancher, the land appreciates, so it’s a sound long-term investment. A billionaire can pick up a deal in B.C.

“If you are wealthy American looking to have a Yellowstone spread in Montana you will pay double or maybe three times as much for a ranch there than here,” says farm, ranch and resort broker Sam Hodson, who works at LandQuest. “We are seen as good value.”

It’s not easy to find out who controls B.C.’s ranches because they are sold as shares in a company, but everyone knows that American billionaire Stan Kroenke owns Canada’s biggest ranch, the Douglas Lake Ranch near Merritt, B.C. – complete with private lakes. Mr. Kroenke is married to Walmart heiress Ann Walton. His cattle company owns 271,000 deeded acres and a licence to more than 1 million acres of Crown land for grazing, according to its website. He has also bought other B.C. ranches.

It’s standard to have Crown land for grazing included in the deal, as well as water rights, says Mr. Nielsen, who’s also an appraiser.

Unlike Alberta, Manitoba and Saskatchewan, B.C. doesn’t limit what foreigners can purchase, which makes B.C. a draw. Some come looking for water to grow hay and alfalfa. Others are looking to cosplay the ranch lifestyle, even if it’s only for a couple months of the year.

“One guy flew up [from the U.S.] on his private jet. We had a ranch for sale in Chilcotin,” says Mr. Nielsen. “My salesman met him and his wife, and the first thing she said is, ‘can our jet land on the ranch?’ My salesman said, ‘No, you can’t land a jet that size there.’ So they didn’t buy it.

“There are players out there with a hell of a pile of money,” says Mr. Nielsen, who knows many of them, both sides of the border. “There’s status for a guy to own a ranch once they’re rich. It’s prestige.”

Another time he met with a Chinese buyer and his entourage who needed land to grow hay to ship back to a massive sheep farm in Mongolia. He ended up buying somewhere else.

On Aug. 14, a ranch an hour outside of Kelowna goes to auction, held online by Alberta company, CLHbid.com, a group of lawyers and chartered accountants who specialize in farms and ranches. The property includes 670 deeded acres, a licence for 73,000 acres of Crown land for grazing and a lovely 5,156-square-foot custom built log home that easily cost about $9-million to build, according to Mr. Hodson, who sold the property three years ago. The property is now being marketed as “Yellowstone North of 49,” a nod to the TV show starring Kevin Costner that has spurred so much real estate ranch action. The starting bid is $5.9-million, and it will likely go for much more.

“In B.C., we see foreign buyers, but for the most part we are seeing the investment community parking money in farmland, a hedge against inflation,” says CLH co-founder Roy Carter, a lawyer and former farmer. His work focuses on working farms, but there’s a new kind of buyer who’s clearly been watching Yellowstone.

“The world has changed,” he says. “We have sold land to a lot of people that have never walked on it.”

Most people who sell ranches and farms have also worked on them, so unlike some of their new buyers, they know the territory.

“COVID seemed to accelerate things in the world, including the philosophy that I should have my portfolio diversified out of the stock market and put it in real estate,” Mr. Carter says.

Selling through an auction offers transparency and a way for “the market to find itself,” the way that residential is sold in New Zealand and Australia, he says.

Tyler Ruttan, the company’s director of sales, says buyers can bid on properties over a two-hour window from their desks, so the process is interactive. He expects the buyer for Yellowstone North of 49 to be a wealthy person living in West Vancouver who wants a family legacy property.

Global real estate firm Engel & Volkers formed a ranch and farm division in the last couple of years, setting up shop as far away as Jackson Hole, Wyo. – which is said to be crawling with billionaires – and B.C.’s Okanagan, aiming to service urbanites looking for the cowboy lifestyle.

Okanagan realtor Richard Deacon is part of that division, and he had his own slice of cowboy heaven in searing hot Merritt for 10 years – a manageable “ranchette” of 20 acres with a log house where he wrote country music and breathed in the smell of sagebrush each morning.

A couple of years ago he listed a property for an American seller, around 300 acres in size near Golden, raw land with an old homestead and some barns. The Yellowstone TV show was just gaining in popularity and inquiries came from all over the world.

“Most were pretend, or enthusiastically wanting to be in that Yellowstone cowboy lifestyle,” he says.

He estimates about one-third of buyers are looking for a bolthole, something self-sustaining with water rights, such as creeks, lakes and ponds.

He remembers showing the ranch with a private lake to a wealthy buyer from Vancouver who pulled up in a BMW on a rutted dirt road.

“I thought, ‘Wow, this guy is in over his head.’ Often people really do have this romantic notion of buying a property like this, and maybe they don’t care how they will even use it. It’s a lifestyle meets trophy asset scenario in many cases.”

Like most rules in real estate, the ranch trend is largely a matter of following the big money. During the pandemic, the value of ranches went up 50 per cent, says Mr. Hodson.

“You see the Walmarts and Bill Gates investing in farmland all across North America. There is the Yellowstone aspect to it, but it’s also about parking some of their money in real estate and agricultural land. It’s a good place to put it.”

While most buyers are from Canada, he estimates that about 15 per cent of buyers are foreign, including Americans, Europeans and more recently, buyers from China.

“We are starting to see Chinese investment just in the last five years or so. The Chinese investors are usually more focused on downtown Vancouver, buying office buildings.

“And now they have started to get the idea that rural property in B.C., specifically if it’s income producing like a farm or a ranch, is a good deal, and a good place to park some money. So we are seeing them filter into our world more and more.”