18 August 2014, Good quality land is still enjoying potential growth in value despite already strong prices.
Commenting in RlCS’ latest Rural Land Market Survey for the first half of 2014, Richard Liddiard, head of rural agency at Carter Jonas remains very bullish, despite other property sectors becoming increasing more attractive to investors.
With more buyers in the market than land available to purchase, existing farmers are competing ferociously with investors to secure the “marriage value” of their current holding with the land for sale.
In the southern region, good bare arable land is regularly fetching more than £10,000 per acre but the best, with optimum marriage value, is now pushing above £12,000 per acre, compared with the national average of around £9,000 per acre. However, when there are few neighbouring bidders, land sales are achieving closer to the national average.
“The clouds of some uncertainty in the form of taxation changes are not sufficient to change sentiment in what is a favoured asset class,” comments Mr Liddiard. “The other issues around global warming / world population / UK housing shortage all seem to be increasing demand for agricultural land.
“The phenomenal growth in the UK population in the near future must bring with it opportunities as far as land ownership is concerned. Quality land will have some good investment potential and it is the poorer and less well-equipped land that may begin to slow down and in some cases ease back.”
Mr Liddiard says experience also shows that larger blocks of quality arable land are commanding significant premiums from investors and farmers who are more prepared to “satellite” farm.
“Blocks of arable land of 300 acres and above which previously may have sold in lots are now expected to attract higher prices when sold as a whole and this is quite a major change in the way the market operates,” he adds.
“Farmers interested in economies of scale are now happier to take on larger acreages that they can utilise alongside their current holding, employing the same machinery or contractors to cover both.
“A significant rise in interest is also being seen from non-farming purchasers acquiring between 50 - 150 acres local to them.
“Smaller blocks of less than 10 acres have been fetching a premium of up to £25,000 per acre in some cases but at the other end of the scale some woodland and scrub with foot access sold for less than a tenth of that but gave the buyer a chance to own what many people dream of – a piece of land somewhere!”