This has been an exciting year for farmland values, which have increased by an average of 30% across Britain, says Jessica Simpson of Savills' farms department.
Research shows that in England, the average value for all land types is now £3700/acre, which is 87% higher than at the beginning of 2004. In Scotland, the average of £2750/acre is now double that of 2004. In Wales, the average land value is now £2903/acre.
But these figures mask some substantial highs achieved. In Scotland, Charles Dudgeon says the best deals done have been anywhere between £5000 and £6000-plus for an acre of arable land on the east coast, where a shortage of supply has driven up values.
In the central belt of England, demand for commercial units has been the key driver, with regional highs of more than £4500/acre achieved in competitive situations.
In the south west, according to Salisbury-based David Cross, seasonality has not featured in this year's farmland market. He launched a farm on to the market in late November and has already received an offer above the £4m guide.
But the main focus for potential buyers are blocks of commercial farmland over 500 acres, the demand for which he describes as frenzied.
On the supply side there has been little change to the volume of land made publicly available in Great Britain since last year, with figures to the end of November at 184,229 acres for 2007, compared with 179,013 acres for 2006.
Despite the lack of supply, demand for farmland has increased, with a number of investment funds now in the market for both UK and overseas land. These investors are competing against the growing number of farmers, who this year represented 50% of all buyers.
Over two-thirds of all farmers who bought land gave expansion as the reason, which we expect to continue into next year, as commodity prices remain significantly higher than in 2006. Non-farmers, whose primary objective for a purchase is lifestyle, continue to be a big feature, taking about 35% of the market share.
On the selling side, farmers remain predominant at 55% of all vendors, with non-farming landowners accounting for about one-third of sellers, the rest including institutional and corporate sellers.
It is unlikely that 2008 will see a great deal of extra land traded, although those selling before 6 April 2008 will potentially benefit from a lower rate of tax before the changes in capital gains tax take hold. The continuing lack of supply and sustained demand for land is likely to push values up further and we are forecasting growth for next year of between 10 and 15% for the best land in the most highly sought after locations.
Focus on the east - foreign interest pushes up values
In the east of England, Christopher Miles, of Savills' Norwich office, says the firm has brokered deals on more than £110m of land and property totalling over 26,500 acres.
Danish and Irish buyers have been competing with local farmers, driving values upwards. Combined, the two nationalities have accounted for 66% of Savills brokered deals.
But they have not been alone, with interest emerging from Italy and Germany. Almost 70% of the Savills farmland market traded this year has involved an international buyer.
Good quality arable land in the eastern region is regularly achieving £5000/acre and in some recent cases over £6000/acre has been recorded, with grassland now averaging between £2000 and £3000/acre.
A key feature is that 25% of the deals we have struck have been private. Sale and leaseback has also been a feature of the market this year. These deals enable the vendors to continue farming in the short term, while capitalising on the high land values.
As in the south west, demand is highest for large commercial blocks. A third of Savills' brokered deals have been for over 500 acres. The international buyers are particularly interested in commercially viable blocks of land that can be enlarged further when neighbouring land comes on the market.