Farmland values have reached record levels, according to the
Royal Institution of
Chartered Surveyors.
The organisation’s latest rural market survey said values for
the first six months of the year had risen 22.6% compared with 18%
in the second half of 2006.
Average prices increased £686 to £8850/ha (£3581/acre). Arable
land rose 23% to £9287/ha (£3758/ha), while pastureland was worth
an extra 22% at £8412/ha (£3402/acre).
Farm sales fell by almost 30%, but the number of purchases by
individual farmers increased to 50%, the highest level recorded by
the survey. Activity by institutional investors doubled to 4%.
Blackrock, one of the world’s biggest fund managers, has just
launched a
£100m fund that will invest in UK
agriculture. About £15-£20m of that is believed to be
earmarked for buying commercial arable units.
RICS rural spokeswoman Sue Steer said three factors were driving
prices upwards. Farmers expanding production on the back of
improved commodity values, record City bonuses and growing investor
appetite for rural land.
“Rising commodity prices and increased interest in biofuels have
resulted in a bit of a feeding frenzy for farmland as farmers
compete with investors, foreign farmers and lifestyle buyers for
properties.
“The market is being fuelled by City buyers trying to make the
most of low farmland prices and farmers from Denmark and Ireland
are also becoming more visible as they buy up competitively priced
land in the UK.
“Supply remains constrained and insufficient to satisfy the
appetites of buyers,” she added.
Farmers felt under little pressure to sell given the rise in
commodity prices, and the overall strength of the wider economy
mean “lifestyle” owners were also not putting many properties up
for sale, said Mrs Steer.
Prices are set to rise even further, with a record number of
chartered surveyors, who responded to the survey, expecting further
growth over the coming year for both commercial and “residential”
farms.
