Prime land prices in Scotland are expected to rise again this year, while the prospect of CAP reform may prompt more land to come onto the market.
Prices remained steady through 2010 and there was no reason to forecast a drop, said Simon Brown, head of agent CKD Galbraith.
“Land values will hold firm for the year to come with the very best farms and blocks of land, particularly in locations with a high local demand, creating a very competitive bidding process.
“The signs for the arable sector look promising provided that the cost of inputs does not spiral upwards too much. However, investors are looking for a return on capital and are put off if the residential element of the farm comprises too high a proportion of the value.”
The firm has significant buying interest for hill land suitable for tree planting, boosted by the Scottish government’s commitment to plant 10,000ha of new woodland a year and planting grants to support this target.
This has seen a wide divergence of hill values with land suitable for planting commanding a premium over that in environmental schemes or under designations such as SSSI, ruling it out of planting schemes.
While Scottish land values vary widely, average sale values through the firm in 2010 were:
* Best arable: £6000 plus/acre
* Good arable: £4500-6000/acre
* Second class arable/silage: £3000-4500/acre
* Rotational grass: £2000-3000/acre
* Permanent pasture: £1000-2000/acre
* Hill/rough grazing: £100-1000/acre
* Forestry planting land: £700 1,000/acre – occasionally higher
Scottish sporting estate sales doubled in value in 2010, up from just over £20m in 2009 to more than £55m, says Savills. However, this was still short of the £70-80m of transactions completed in 2007 and 2008.
A quarter of the 16 sporting estates sold by all agents last year were sold privately, contrasting with 2008 when almost half chose this route. The open market rewarded sellers well in 2010, said Anna Thomas of Savills, Edinburgh, with some spectacularly strong prices at closing dates.
“For every estate sold last year, another two were buyable privately, and these remain available. It is a brave seller who will risk a private deal in this market. Buyers are emerging from across the globe, and sometimes very suddenly.
“We anticipate slightly more estates will come to the market in 2011. Prices might take a hit if volume increases markedly, but not if it stays at the same levels as recent years.
“Demand persists in a difficult economic market, because owning a sporting estate is often a lifetime aspiration, not a business decision.”