Scottish farmland values rose by 3% on average in the first half of 2013, according to Knight Frank, although growth slowed slightly in the second quarter.

The rise puts the value of top quality bare arable land at just over £7,050/acre, while ploughable grassland is worth about £3,600/acre and hill land £614/acre.

“People are still positive about farmland, but they are being slightly cautious,” said James Denne, head of farms sales in Scotland.

“North of the border we tend not to see as much activity from investors as in England. Most of our buyers are farmers and they take a fairly canny view when it comes to buying more land. Anything that is too fully priced runs the risk of attracting limited interest,” he said.

“I think if investors were aware of the quality of some of the arable land here and the strong demand to rent or contract extra ground they might be looking further north.”

The Knight Frank Scottish Farmland Index tracks the average price of bare commercial arable and pasture land in Scotland. The quarterly index is based on the opinions of valuers and negotiators and on the results of actual sales by both the firm and by competitors.

“At the moment it is woodland not wind that is driving demand for Scottish hill land,” says Michael Ireland, head of the firm’s rural valuations in Scotland.

“There is still a lot of demand for hill land suitable for tree planting, either for commercial forestry or to re-establish native woodland habitats. An added bonus is the ability to sell carbon credits that organisations can use to offset their carbon dioxide emissions.”

A further 3% growth in values is predicted over the next 12 months, supported by continued shortage.