Australian super funds could step up their investments in agricultural land as they realise it could be a profitable investment, says the chief executive of agricultural investment manager GO.FARM, Liam Lenaghan.

Speaking after announcing a $150m investment in two agricultural properties – one in the Riverina region in NSW and a second in Victoria’s Murray Valley – with the support of Qantas Super, Mr Lenaghan said GO.FARM was in discussions with other super funds about investing in agricultural land.

Founded with the backing of the Costa family and other family offices, GO.FARM seeks to buy under-utilised agricultural properties which it can transform into more productive assets.

Qantas has committed to invest $200m in GO.FARM projects and has been a key investor in the two new investments in which GO.FARM will buy more than 5000ha of farm land with plans to improve its productivity.

“The dial is certainly shifting,” Mr Lenaghan told The Australian. “Five years ago, it was very hard to get an audience with a lot of the super funds (about investing in agricultural land).

“Now the doors are open, there are dialogues and due diligence is occurring.”

Mr Lenaghan said “natural capital” was emerging as an important investment theme for super funds. “The industry knows their members expect them to be making responsible investments including investing in natural capital and in rural communities,” he said.

He said super funds were now seeing that agricultural land could be a potentially good investment.

In the latest deals, GO.FARM will buy 2666ha of land across two properties in the Riverina, including one called Dellapool, with 11,361 megalitres of water entitlements. The company plans to transform the property into high-density olive groves to capitalise on the increasing demand for olive oil.

In the second deal, GO.FARM will buy Sandmount North, in Victoria’s Murray Valley, spanning 1556ha, with 3211 megalitres of water entitlements, with plans to expand its almond and tomato producing operations.

Mr Lenaghan said the Sandmount North property was in one of Australia’s most water-secure regions, and was “strategically positioned for sustainable agricultural production”.

He said the availability of water rights on the two properties would be critical as the federal government was planning to buy back water entitlements in the Murray Darling Basin region.

This process would make rural properties with water entitlements in the region more important. The two deals will increase the portfolio of assets under management by GO.FARM to $1.3bn.

Mr Lenaghan, founder and managing director of GO.FARM, said his firm’s goal was to produce high-value, water-efficient horticultural operations at the forefront of agricultural innovation.

“We will unlock the full potential of these assets using technology and sustainable water management to deliver both strong financial returns and tangible benefits for regional communities,” he said.

Mr Lenaghan said GO.FARM had a “big pipeline of projects” to develop over the next five years with its existing land holdings but it was also looking for potential new investments.

“If the right opportunities come up at the right price, we will continue to buy,” he said.

Qantas Super chief investment officer Andrew Spence said the fund had been impressed by GO.FARM’s approach to creating value through asset improvement.

“Their excellence in execution, combined with their deep understanding of agriculture and commitment to sustainable practices, sets them apart as an agricultural manager,” he said.

“Backing GO.FARM in these acquisitions aligns with our mission to deliver strong, long-term returns for our members through high-quality investments in sectors poised for growth.”

Mr Lenaghan said agriculture would emerge as a strategic asset class on the back of the expected surge in global food demand by 50 per cent by 2050.

He said Australian farmland, currently valued at more than $800bn, was under-represented in many institutional investment portfolios, despite its position as the nation’s second-largest real estate class.

Agricultural land had had “historically impressive risk-adjusted returns; with farmland achieving a 20-year compound annual growth rate of 8.5 per cent and water entitlements yielding 7 per cent over the last 15 years”.

“Agriculture’s low correlation to other asset classes, and its performance during inflationary periods, further highlights its investment potential,” Mr Lenaghan said.

GO.FARM currently has 96,000ha of farmland and 112,000 megalitres of water across NSW, Victoria and Tasmania. Qantas Super is one of Australia’s largest corporate superannuation funds, managing about $9bn in assets for about 26,000 members.