Coal Seam Gas activity
We would like to thank Charlie Blomfield from Agricultural Management Company for his comments in this section.
Much of the sales activity in southern Queensland over the last two years is attributed to Coal Seam Gas (“CSG”) companies in acquiring land for infrastructure development. Each company has its own policies in relation to land acquisition or securing access to key sites through binding agreements. Transactions have sometimes taken place at premiums of up to 30% over current market value. However, this premium cannot be applied to all properties located within CSG areas, and has even been shown not to apply to neighbouring properties.
The effects of CSG infrastructure development on long-term property values are unclear as they are yet to be tested by the open market. However, potential increases in value may exist as some property investors are attracted to the additional income generated from access and maintenance agreements in place on particular properties. The price premiums paid by CSG companies for land may flow on to other properties in the region as CSG infrastructure is developed further, as has occurred in mining regions of central Queensland.
Farmers will be compensated by CSG companies to negate the impact of any loss of land value, though key concerns around soil and underground water will slow widespread acceptance of CSG in agricultural areas. There is a portion of the market that takes a very positive view. Particularly in the younger generation of farmers, the income potential from CSG infrastructure development and maintenance agreements is seen as an opportunity to make off-farm investments or fund farm capital works for improved farm profitability.