Land, Farms & Estates Market Update

    Savills latest research examines the farmland market over the whole of 2010 and reveals a year of rising values in the face of tight supply and strong demand.

    The amount of farmland publicly marketed across Great Britain increased by 11% compared with 2009, to 158,000 acres.  This increase was concentrated in Scotland (where it rose by 35% to 36,928 acres) and Wales (65%); in England supply remained unchanged.

    The average value of grade 3 arable land across Great Britain increased by 11%, to £5,250 per acre, but this average conceals arable land deals done at up to and exceeding £10,000/acre in England.  Deals at up to £7,000 per bare land acre have been struck in Scotland. 

    This growth in values was underpinned by continued strong demand.  Farmer buyers accounted for 56% of purchasers, compared with 61% in 2009. Institutional and corporate buyers increased to 9.6% (from 3.9% in 2009), suggesting the investors are once again competing with farmers. Indeed, 31% of purchasers cited investment as the reason for buying. In Scotland in particular, the arrival of non-farming land investors looking for a safe haven for capital ahead of possible inflation and away from the turbulent financial markets, was new to last year's market, something we have not seen since the demise of the pension fund investor in the 1980's.

    It is interesting to note that of 137 farms advertised for sale in 2010, less than half (44%) have sold; the remainder are available or have been withdrawn. Those unsold are mainly grassland/livestock farms, where values have plateaued as the steam comes out of the beef price and the cost of feed rises. The lack of Irish buyers, owing to the country's troubled economy, has remained a problem for stock and small dairy farms on the west.  The largest farm sold last year was 757 acres, in Aberdeenshire.  There were only two units with more than 1,000 acres offered for sale last year.

    2011 will be an interesting year. Whilst demand is not expected to falter it will remain price sensitive especially where future income generating opportunities are limited. Our main baseline forecast for the short to medium term remains unchanged at around 6% per annum, although we expect growth in values to be diverse and largely related to quality.

     
     

    Key contacts

    Anna Henderson

    Anna Henderson

    Director
    Rural

    Savills Edinburgh

    +44 (0) 131 247 3703

    +44 (0) 131 247 3703