Investment Articles

Average cost per acre for agricultutral land for sale in the UK (grade3) was 1% below inflation, and is projected to outstrip the figure comfortably by December with annual growth projections for the year pegged around 6% according to Savills Farmland Valuer Survey Index. Great news for those with farmland investment on the mind.

Meanwhile gold, a which is much more liquid and easier to trade than farm land showed a price correction during the same period both in current and real terms,’. The Report also shows gold falling by 1.9% in the first quater and by 4.4% inflation adjusted. These figures clearly demonstrate farm land as an investment is out-perfofming the more traditional investment in gold.

‘We anticipate that growth will comfortably outstrip inflation by the end of the year with gold and farmland continuing to be good hedges against inflation,’ the report adds.

It was the eastern counties accounting for just below 50% of all the acres marketed during the first three months of the 2010. Around 43% of all land marketed publicly was in the East, and values in this region like elsewhere continued an unpward trend.

The average value of Grade 3 arable land in England increased by 1% during the first quarter of 2010 to £5,000 per acre. Similar increases for prime arable and grade three pasture, which now average over £5,500 per acre and around £4,400 per acre respectively, were found in the report.

Growth of 1.7% was recorded in the same period for average prime dairy land which now stands at £5,365 per acre. Poor pasture increased by 2.4% to £3,450 per acre reflecting tentative signs of increased activity in the amenity farm market.

However, the report says that these averages mask some significant ranges in value depending upon location and land quality. In the East for example the gap in values continues to widen with the best achieving around £8,000 per acre and the worst £4,500 acre.

David Garner, Managing Partner at Alternative Investment Specialists DGC Business Consulting (DGC) comments:

"We are in a good place here at the moment in terms of opportunity, uk farm land is supported by great fundamentals and will continue to show strong growth as the need the feed a rapidly expanding population will not abate in our lifetime, yet the price of UK farmland is half that of which you will find in Ireland, Denmark or Holland, meaning that there is still room for farm land to double in value."

"We've seen a marked increase in the number of enquiries we receive from investors looking for farmland as part of an investment portfolio, and the buy to let structure we are delivering allows them to own a working farm, or a piece of one, and rent it to back to the selling farmer, all of which you can do for £20,000".Added Mr. Garner.

In Scotland, as in previous years the value of farmland remained unchanged during the first quarter of 2010 mainly due to the lack of transactions to provide hard evidence of price movements. Historically the farmland market starts trading later north of the border.

‘Whilst values have risen for all land types, the gap between the best and the worst is widening. Good quality land in high demand areas is now fetching up to £8,000 per acre whilst poorer land in less popular locations is nearer £4,500 per acre,’ said Christopher Miles head of farm agency in the East.

Cash buyers now represent over 60% of applicants registered with Savills to buy farmland. Most of these applicants are looking to purchase a property of up to 500 acres.

‘The fact that non-farmer buyers have, albeit tentatively, started to re-register their interest in farmland combined with a continuing low interest rate environment leads us to see no reason why farmland values will not gain momentum and we fully expect annual growth to be in line with our forecasts of around 5% to 6%,’ said Ian Bailey head of Savills rural research.

For more information on farm land investment click here.