TENANTED FARMLAND continued to be a good investment in 2003, according to the latest Investment Property Data Bank (IPD) Let Land Index.

The overall return, which is based on 241 estates covering 438,849 acres, was 21.4% for the year to December, compared with 19.5% in 2002.

But this return included profits from whole or part sales/purchases, reversions to vacant possession and a substantial increase in capital values.

On properties where there were no transactions or development, returns were still only slightly less, at 21.3%.

Both results put let land ahead of UK commercial property, equities and gilts over the last three, five and 10-year annualised periods.

But over the 23 years the index has been running the annualised return has failed to outperform its competitors.

Capital values for let land rose by about £200/acre on average over the year, to £2,200/acre.

The huge upsurge in residential values reflected in this has also fuelled returns from tenanted estates, and has been the driving force that enabled them to exceed the return on residential investment property over the three years that IPD has measured it.

Capital growth amounted to 18.3% in 2003  and 65% over the past four year. But the income return was a relatively meagre 3.1% – the lowest since 1982.

As of December 2003, the IPD sample included land from 241 estates, with a total value of £1.1bn.