The capital value growth of UK farmland is forecast to outperform many commodities markets, residential property, UK gilts and West End offices, according to Savills rural research who expects the average value of farmland in the five years from 2012 to increase by 36 per cent. More immediately the company predicts average growth of 5 per cent for 2012.
This forecast growth follows a substantial rise in average farmland values over the past five years (138 per cent) which was significantly greater than that recorded for either residential or commercial property or equities.
Alex Lawson Director of Savills Farms and Estates comments, “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.”
Lawson adds: “Farmers continued to be active buyers particularly when the opportunity to buy a neighbouring block of land arose. There is also undoubtedly demand for the best sporting/residential estate from the amenity buyer: the biggest issue has been the lack of property to buy.”
Charles Dudgeon head of farm and estate sales in Scotland comments, “With continued demand and a decrease in supply, average values have remained firm. We have seen widening divergence between the values of the best and the poorest arable land, with the former worth up to double the latter: the best arable acres can reach more than £8,000 per acre, whilst secondary arable may be nearer £4,000 per acre.
“Whilst Scottish buyers and local farmers are the most active in the market, there has been an increase in the number of viewers from south of the Border, attracted by the quality, scale and price of some of the farms which have been offered for sale this year.”
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