The land market in the Central South – outlook
Sale highlight of the year: Damerham Fishery, Fordingbridge, Hampshire. Run as a commercial fishery, with leisure fishing and corporate entertainment. It received a lot of interest including those looking to run the commercial side in connection with other farming activities in the region. The property is sold subject to contract in excess of its £1,850,000 guide price. James Prewett of Knight Frank outlines what the key features of the Central South land market were in 2014 and predicts what 2015 could bring.
2014 market – key features
The farmland market was volatile during the first three quarters of 2014. The amount of land available remains low and many of the farms on offer have had issues for purchasers to consider. The reasons to sell remain limited mostly to the three Ds of debt, death or divorce. Despite the high average age of those working in the industry, retirement sales of whole farms remain fairly rare.
- Big variations in bare land prices with arable land ranging from £7,500-12,500/acre.
- Land quality has become more important, but scale appears to be equally so.
- Best price relies on being able to offer land with vacant possession to enable purchasers to gain rollover relief for capital gains tax.
2015 outlook – main market influences
- The prospect of mansion tax and change of government will be an issue on the estates market at least until the May general election, but shouldn’t affect the commercial farmland market.
- Commodity values need to improve to put the icing back on the cake; there are concerns about some over-capitalised dairy farms that have budgeted at much higher milk prices.
- There are definitely more farmers and landowners with money to spend in 2015 following residential, commercial or compulsory purchase deals in 2014.
2015 outlook – what will happen to land prices?
- Average values will continue to rise, probably by 5-10%.
- There will be geographical hotspots were there will be the perfect storm of buyers competing, resulting in prices increasing significantly.
How much land will come on to the market in 2015?
Unless there are any swift changes to the capital taxes system or a major upturn in overseas investment opportunities, we don’t think there will be much change in the amount of land available.
Easiest farm or land to sell in 2015
A well-equipped arable farm with nice house and sporting potential, extending to 1,500 acres and more, which is well suited to contract farming and offers a good level of amenity.
Most difficult farm to sell in 2015
A small farm of about 100 acres with five or so cottages, some with occupancy restrictions.