Land values in the highly fertile region, located two hours south of Darwin, have soared over the last two years, from roughly $1100 a hectare for cleared freehold to more than $2500/ha, with a recent sale suggesting a peak of more than $4000/ha for better areas.

That price rise has been driven by forestry companies, including Great Southern Ltd and Northern Tropical Timber, which have been utilising millions in investment funds and the up-front tax advantages on offer through the MIS rules to convert the country to mahogany forests.

"They have changed the land use of the region from pastoral and cropping to timber growing in the space of just two years," Herron Todd White valuer Frank Peacocke said.

Mr Peacocke estimates that forestry companies now own more than 50 percent of the 100,000 hectares of freehold land in the Douglas Daly.

And that figure could grow to 70pc if they are successful in acquiring a further five neighbouring properties totalling 21,000ha, which were advertised in last week’s Queensland Country Life as for sale by expression of interest.

Listed through Ruralco, the five blocks - Bonalbo (6525ha), Maneroo (5746ha), Rudby Downs (4982ha), Midway (2908ha), and Bunji Bunji (1086ha) - include 8619ha of developed country.

It is this cleared country most sought after by the forestry firms, with access to water and irrigation not influencing their selection.

The firms are looking to tap into the global shortage of the fast-growing and high-value African mahogany, and are being encouraged by the Federal Government’s policies which aim to have Australia self-sufficient in timber supplies by 2020.

And they have access to huge amounts of capital to fund the purchase of these vast tracts of land.

According to Great Southern Ltd’s 2007 annual report, it last year launched its high value timber project which raised more than $60 million from investors for use in African mahogany and teak plantations in the Northern Territory and Queensland.

In total, Great Southern had $1.9 billion in funds under management in 2007, which it aimed to grow to $3b by the end of this year.

Similarly, Northern Tropical Timber’s website states it was aiming to raise $19.3m between 2006 and 2008 for investment in its NT mahogany project.

Notably, NTT’s website claims the plantations are "being developed on cleared agricultural land, in areas where it is becoming increasingly difficult for farmers to continue with other agricultural pursuits".

However, it is not lack of viability but the cash on offer from the forestry plantations which is motivating cattlemen to sell, according to Ian McBean, who is offering his block Bonalbo as part of the Ruralco listing.

"The land values are very high at the present time because of the MIS schemes with the forestry moving in," Mr McBean said.

"It's worth a lot more to the forestry people than it is as a cattle station, and if we can sell at the top of the market, we can move on and expand our business elsewhere."

Mr McBean said the NT Government’s on-going moratorium on land clearing was also affecting investor confidence in traditional agriculture, while making already developed country even more valuable to the forestry firms.

Denis Brosnan, manager of Elders Katherine, said MIS activity in the cattle market was usually in the form of leasing land from local graziers.

Mr Brosnan said most sales in the grazing sector were still between farming families, with the NT representing better value for money than Queensland grazing land given the prospect to improve land and bolster farm productivity.

SOURCE: Queensland Country Life, April 24 issue.