Sales stay strong

The EU referendum created some uncertainty at the beginning of the year, but the market is holding strong in the face of political change.

The spring farmland market in England was quieter than normal, which was undoubtedly due to uncertainty in the run-up to the EU referendum. However, activity since the vote suggests that sales for the year will more or less catch up in the latter stages of 2016.

"Farmland is still very much a traditional market with the majority of sales in the spring and autumn period. While the referendum probably resulted in some land being held back in the spring, there are some big estates which have come to market since the vote," says Richard Binning of Savills Farms and Estates.

Savills research shows that just over 162,000 acres were publicly marketed across the UK in the first nine months of 2016, which is slightly up on the acreage marketed during the same period of last year.Within that, in England activity was down by 1 per cent, tempered by uncertainty, but in Scotland the opposite was true with activity up by 4 per cent andWales showed a similar pattern where activity (albeit from a smaller base) was up 43 per cent.

While there remains some uncertainty around support payments during and post-Brexit, government confirmation that current levels will be guaranteed until 2020 has helped settle the market. Interest in estates launched in the late summer and autumn has reflected this confidence, says Alex Lawson of Savills Farms and Estates.

"We have recently brought Ballington Manor Estate in Wiltshire to the market, the first of its type postreferendum, and there has been a lot of interest from a range of potential buyers here and abroad. It’s an indication there is a good level of appetite for the right property at the right price," says Alex.

While Ballington is an excellent example of an amenity estate, there has also been strong interest in the Compton Estate, a commercial investment property close to Oxford.

"Very little land of this scale comes up for sale in such a popular location. Because of that, it has an extremely broad appeal to farmers, plus private and institutional investors looking for a sensible hedge in a diversified portfolio," he adds.

Safe investors favour farmland

Though income yields tend to be low from farmland, it is seen as a very secure and tangible asset against other more volatile markets. This, coupled with the scarcity of land, will continue to drive the market.

"If it was purely down to the profitability of farming then the uncertainty around Brexit and other variables in agriculture might have a more significant impact. As it is, people also buy for a huge range of other reasons, including capital growth, lifestyle, diversification or conservational interests,” says Alex.

Lack of supply plus the gap between land price in England and Scotland is continuing to drive the market for farmland in Scotland, says Charles Dudgeon of Savills Farms and Estates, Scotland. "Farmers look to Scotland for larger areas which offer better value for money. This year we have several farmers able to move from 400 acre farms in England to 1,000 acre units in Scotland."

There has also been a strengthening in the amenity farm market for units of around 250 acres or less, after a period of stagnation since the 2007 recession.

International buyers are back in Scotland

"The most noticeable impact of Brexit in Scotland has been the boost to international buyers from weaker sterling. This is driving interest in sporting estates; for example, Tulchan Sporting Estates Limited, a 21,000-acre Highland estate with a guide price of £25 million, has attracted considerable offshore interest," says Charles.

While the complexities of the Brexit process are likely to cause some uncertainty, a continuing lack of supply and the attraction of farmland and estates to a variety of buyers mean interest should remain firm for the near future.

 

 
 

Key contacts

Philip Gready

Philip Gready

Executive Director
Rural, Energy & Projects Division

Savills Margaret Street

+44 (0) 20 3107 5470

+44 (0) 20 3107 5470

 
 

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