Expansion by farmers accounted for the majority of farmland purchases during 2011

Farm expansion was the reason behind nearly half of all the farmland purchased in the UK last year with farmers accounting for just over six out of 10 purchasers, according to the latest research from Savills.

View Graph 1: Farmer Buyers and Sellers

Alex Lawson Director of Savills comments, “Most of these deals involved arable producers taking on more acres. The arable sector is relatively profitable at the moment and farmers are feeling quietly confident having benefited from some fantastic commodity prices and this year’s crops are looking excellent.”

Existing private landowners remain a fairly constant source of buyers, last year they represented 10% of buyers, compared with 13% in 2010. New private landowners were more active but still not back at the 2006/07 levels of 30 to 40%.

Lawson again, “There is a lot more caution amongst the financial sector, although the investment and taxation benefits of holding farmland are encouraging more interest in farmland as an alternative asset class.

The number of overseas buyers has fallen significantly since the beginning of this economic downturn. In 2011 just 3% of all buyers of farmland were from overseas compared with 26% in 2006. However, they still feature as prospective buyers and bought a few significant properties in 2011. 

View Graph 2: Overseas Buyers

On the sales side, the proportion of farmer sellers fell by 4% to 43%, which is the lowest level since 1993. By contrast, corporate/institutional selling activity doubled last year accounting for 13% of deals, a proportion last seen in 2006.

“However, much of this was probably due to profit taking,” said Lawson. “Anyone who bought land at least three years ago has seen their investment double in value – no other asset has performed as well. Evidently, in many cases sales have been driven by a need to raise capital for alternative investments.”

The Danes continue to be net sellers of British farmland, with the majority using their gains from the British land market to reinvest at home.  They represented 5.3% of all sellers in 2011 and 4.2% in 2010. They were, however, concentrated in the eastern regions of England and represented 10% of all sellers here.

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