Cereals 2013: Good drainage and irrigation drive arable land market

Quality arable land with good drainage and irrigation is driving the top end of the land market, with sizeable chunks commanding up to £12,000/acre.
 
“It used to be the small parcels of land that used to get the premium prices but size matters now,” said Mark McAndrew, head of Strutt & Parker’s farm agency.
 
Buyers were looking for large chunks of land, and there was fierce competition on the market for commercial arable farms offering 1,000 acres or more.  These were achieving up to £12,000/acre, he said.
 
Quality was also important and due to changing weather patterns, buyers were looking for farms with good irrigation, drainage and soil quality.
 
“When I started, quality had nothing to do with it.  But farmers are again wanting land which will produce a yield in a wet year or a dry year,” said Mr McAndrew, speaking at Cereals 2013 in Lincolnshire today (Wednesday 12 June).

Divorce value of land was also important, he said. “The big money is being made for commercial land; premium buyers of farmland don’t want the big house.”
 
There was a wide range of land values, and investment buyers were driving the market, said Mr McAndrew who estimated inventor Sir James Dyson had already invested somewhere between £150m and £200m in Lincolnshire farmland in the past 12-18 months.
 
“The world has been turned on its head by Mr Dyson; I think he is about to spend the same again but I think he is a one off,” said Mr McAndrew.
 
“The people who are paying the big money for farmland are not farmers – they are using inheritance tax (IHT) as a driver for buying farmland.”
 
However, proposed changes to agricultural property relief could put a stop to this, he said.

It was unlikely prices were going to jump up anytime soon, and going forward there would continue to be a range of land values, said Mr McAndrew.

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