Agency Update

    UK farmland values are on course for a tenth consecutive year of annual growth, following a 3.9% increase for all land types during the first half of 2012.

    According to our research, the value of land continued to strengthen in the second quarter of 2012. Across Great Britain the average value of prime arable land rose by 2.1%, to just under £7,000/acre, following a 1.8% increase in the first quarter of 2012. In England, average prices increased by the same amount, to just over £7,000/acre, recording total growth for the first half of this year of 4%.

    The highest rates of growth were in the arable areas of Eastern England, where demand for productive commercial land remains strong. Prime arable land values increased by 4.6% in the East Midlands and 2.9% in the East, to average £7,500/acre and £7,650/acre, respectively.

    In contrast, growth was more muted across the West Midlands (1.5%), South West (0.6%) and South East England (2.8%). This is likely to be due to the prominence of smaller livestock farms in these regions, where the residential element of the farm value is relatively high.

    In Scotland, the value of prime arable land increased by 2.2% during the first half of 2012, to average £6,000/acre. However, our Farmland Value Survey shows that grassland values remained unchanged.

    In some cases, prices achieved have been well in excess of the average, with around £10,000/acre being reached for good commercial arable land. We are confident that our baseline forecasts, generated by our Farmland Value Model, remain on track at around 5% growth for 2012 and 36% over the next five years, staying ahead of inflation.

    Our model factors in farm incomes and commodity returns, and Defra’s announcement that Total Income From Farming increased by 25% in 2010/11 has created a positive outlook for agriculture. The finely tuned supply and demand balance for commodities is also strengthening prices, and availability of farmland remains historically low, which inevitably supports market values.

    However, in the short-term this is balanced by some uncertainty over future CAP reform, as well as poor cereal and forage yields after this year’s wet summer. Growth will also be moderated by the slow recovery in the prime country house market, which continues to affect the value of residential and amenity farms.

    Notable sales
    Savills has sold over 14,000 acres of land privately so far in 2012, plus more than 16,800 acres publicly. Regional highlights include:

    • Court Lodge Farm, East Sussex. 654 acres. Sold in excess of £4.5m guide.
    • Foxbury Farm, Oxfordshire. 350 acres. Sold with a guide of £3.5m.
    • Cambridgeshire Fens. 908 acres of Grade 1 farmland sold for more than £8,000/acre.
    • Scottish borders. Bare land achieved 35% over guide price at £9,000/acre.
    • Eggs & Co chicken farm, East Yorkshire. 100 acres and 40,000 laying birds. Sale agreed with a guide of £1.75m.

     
     

    Key contacts

    Charles Dudgeon FRICS

    Charles Dudgeon FRICS

    Director
    Rural Sales

    Savills Edinburgh

    +44 (0) 131 247 3702

    +44 (0) 131 247 3702

     

    Alex Lawson

    Alex Lawson

    Director
    National Farms and Estates

    Savills Margaret Street

    +44 (0) 20 7409 8882

    +44 (0) 20 7409 8882