Property company predicts farmland value to rise in 2012 (From Gazette & Herald)

Property company predicts farmland value to rise in 2012

2:40pm Thursday 26th January 2012 in Farming news

UK farmland continues to outperform other investments like UK gilts, residential property and West End offices, according to Savills rural research released this week.

The company’s research team expects the average capital value of farmland to continue to increase by 36 per cent in the next five years, in addition to its rise of 138 per cent in the last five years. For 2012, Savills is also predicting average farmland value growth of five per cent.

Andrew Black, director at Savills York, said: “Driven by the healthy arable sector, local prices continue their upward trajectory, albeit at a slower rate.

“Record prices of more than £10,000 per acre have been achieved in a number of sales, notably in East Yorkshire and on the Wolds.

“The last year has seen wider price differentials between the top and bottom of the market, as purchasers become increasingly selective about what and where they will buy.

“Supply has fallen slightly, most notably in Northumberland, which saw a drop of 39 per cent. But we have seen increased volume in North Yorkshire (up by 37 per cent) and East Yorkshire (82 per cent), sustained by strong demand from farmers, who want good arable land, and investors.”

Medium-term prospects for UK farmland in terms of capital growth are extremely positive, although there will be higher yielding alternatives, according to Savills.

Alex Lawson, director of Savills Farms and Estates, said: “Against a backdrop of economic uncertainty, the farmland market is likely to become more diverse in terms of performance, we expect the continuing tightened supply and low interest rates to maintain values for all but the worst quality land.”