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 Mike Harrison - Saffery Chammpness
Recently published research by a leading firm of land and estate agents[1], covering the first two quarters of 2011, shows that farmland prices have continued to rise, for the seventh quarter in a row, with the average price of English farmland now breaking the £20,000 per hectare (£8.094 per acre) barrier for the first time. While land agents give a lack of supply as the principal driver for rising prices, there are also other factors at work, say Saffery Champness Landed Estates & Rural Business Group.
Mike Harrison of Saffery Champness says: “Clearly the low volatility of farmland prices, combined with steady price growth, makes agricultural land attractive in comparison to other investments, especially equities. “Notably, demand from the home market, including UK farmers and landowners, has strengthened significantly, replacing demand previously experienced from overseas buyers including farmers from Ireland and other parts of the EU. “There has also been an overall increase in the supply of farmland in 2011 particularly of equipped arable farms. This will, in part, be due to the next generation of farming families not wishing to follow in their parents footsteps and therefore on retirement the farm will come to the market as and when they wish to realise their investment. “Furthermore a number of farming businesses have sought to expand their acreage to increase overall farm returns and have been able to do so on the back of commodity prices which have experienced comparable rises to land values over the same period. “In addition to established farming businesses, lifestyle purchasers are active, especially those looking for property which offers the combination of high amenity and landscape value, and often including with sporting. High net worth individuals are particularly attracted to the bonus of Inheritance Tax reliefs that still apply to agricultural holdings”, says Mike Harrison.
Overall, Saffery Champness say that there is an awareness by farmland investors of stock markets falling or, at best, fluctuating and that land seems a safer home for their wealth. Those who own both equities and high value residential properties, especially in London and the Home Counties, are aware that the residential market tends to fluctuate more than an investment in agricultural land that provides both more stability and income. “The term ‘safe as houses’ should perhaps be amended to ‘land is safer than houses’” Mike Harrison concludes. |
Rural agency 
