Prices for a farmland market have been on a continuous rise in recent years. Farmers Weekly looks at what’s selling at the moment and the outlook for the rest of 2013.
There are buyers in the North West, but not as many as there were a year ago, said Tony Rimmer of Cheshire-based Rostons.
“I think things have peaked in our area and people are more cautious, although if it’s the right parcel it will sell right away,” he said.
Unlike some of the arable areas where outside investors make up a high proportion of buyers, farmers still account for about 75% of transactions in Cheshire.
“Progressive farming businesses are keen to secure land, but unless it’s right next door or there are really special circumstances, they won’t push beyond that £10,000/acre,” said Mr Rimmer.
Prices for decent commercial dairy and arable land in Cheshire had reached the £10,000/acre mark before other areas of England and had maintained a healthy premium compared with the rest of the country, he said.
However, as land prices had risen in other regions such as Herefordshire, Shropshire and Lancashire, the same gap was not being maintained. In the market for versatile land for arable or maize production, buyers want to get hold of decent-sized blocks of 40 or 50 acres, said Mr Rimmer.
The past couple of years had seen a good sized dairy farm move from 180 acres to 250 acres or larger, although a recent sale by Rostons saw a 180-acre Cheshire dairy unit completed within three months of launch to very good demand. It sold to a local dairy producer as a second holding.
Farms and land would stick if there was not good neighbour or outside interest underpinning the market, said Mr Rimmer.
Doorstep value means local farmers are also still offering premium prices in North Yorkshire, while investors will look in a 20- to 50-mile radius, says Cundalls’ Tom Watson. This area has seen the launch of several large farms just in the past few weeks. “I can see prices overall staying firm, but not necessarily rising except for where neighbours are both after the same block,” said Mr Watson.
While land quality was the key issue in the price achievable, accessibility was also important.
However, the fact that some land was now making £10,000/acre meant that many potential vendors expected this to be achievable for their land too.
While some sales were completing very rapidly, legal matters continued to hold up the completion of many, with legal obligations between buyer and seller taking longer than ever to resolve.
This county has been a hotbed of farm sales gossip with the purchase of farms and land by entrepreneur Sir James Dyson in the past few months.
Much of the land being sold is changing hands on the private market without the need for open marketing. Several Danish investors have realised the capital growth in the UK farmland they bought just a few years ago and have sold up, returning to Denmark where land prices have fallen.
“Prices are holding steady, especially in cases of larger units attracting buyers from outside the county,” said Ian Walter of JH Walter, based in Lincoln. This would continue as long as there was a shortage of supply and people could see the prospect of profits from arable production, he said.
Farmers continue to be the predominant purchasers, often competing with very wealthy buyers from outside the industry. As long as these investors were keen to place their money in a safe haven, the farmland market was likely to hold steady. It would take an improvement in the general economy to attract investment away from the farmland market, said Mr Walter, “But things have to change for that to happen.”
Whether farmers would be tempted to sell if they thought the top of the market had been reached was an interesting question, said Mr Walter, who expects land prices to level out.
Seven thousand pounds an acre was the new benchmark for Grade 3 arable land values, just as £2,000/acre had been for so long in the past, said Mr Walter.
Grade 2 in Lincolnshire was in the £8,000-10,000/acre bracket while Grade 1 land was making £10,000/acre and more. “Lincolnshire is still good value compared with some counties where the standard price for good Grade 3 land is up at £12,000/acre and higher.”
Boundary issues, land registration and title along with the option to charge VAT were issues that were likely to slow the progress of farm and land transactions.
As in many areas, there is not a huge volume of land for sale in the South West but correct valuation and pricing is crucial to a sale, otherwise things stick, said David Kivell of DR Kivell & Partners.
He has sold three commercial farms in the past few months at well over their guide prices. The region has seen a return of lifestyle buyers from outside the area, including those happy to take on well over 100 acres of land and these often did not need to arrange any finance.
“We’ve seen more of these buyers recently than for the past two or three years,” said Mr Kivell. “But it’s all about location – with these buyers it’s probably more about location than about price.”
Anything close to the coast in Devon or Cornwall would probably appeal to these buyers but more remote or exposed properties would not sell so well to residential interest, he said.
In his most recent sale of a 148-acre farm just north of Dartmouth, only one in four of the 30 viewers was a farmer.
The residential farm market in this area has picked up slightly this year, according to Matt Sudlow of Strutt & Parker, which has two lifestyle farms under offer.
Correct pricing was key to get interest in this market, with residential buyers willing to tolerate just one or two negatives.
Key detractors for potential buyers were poor location, for example close to a busy road, other noise, aeroplane flight paths or lack of privacy.
Large blocks of commercial farmland are rare in the South East but almost 500 acres of mainly bare arable land near Holtye in East Sussex is not yet under offer.
On the market for £3.5m, the Grade 3 land at Great Cansiron Farm was launched in May, with the guide price reflecting an arable value of about £7,500/acre. On the market as a whole or lotted into four to encourage neighbour interest, the land is mainly arable but includes about 58 acres of woodland and ponds.
With a market background of high demand for arable land, neighbouring farmers have made enquiries and although not in a ring fence, it is also expected to attract interest.
Other recent large bare arable land blocks in the South East over the past 12 months had also been guided at £7,500/acre but had sold for more than £8,000/acre, said Mr Sudlow.
He sees lack of supply keeping prices firm in the region, but no return to the rapid increases of the past few years.