26 June 1998

Let land returns drop

RETURNS on let agricultural land tumbled last year, according to latest estimates from FPDSavills.

Investors received just 8% on their money, compared with more than 23% during the previous three years. The main reason was lower capital growth, which fell from almost 20% to 4% over the same period.

Continued income growth of 6%, due to higher rents, contributed to a rise in capital values, but average yields moved out from 4 to 4.2% leading to the more muted rise, says Jim Ward, director of research.

The dramatic fall in farm incomes last year, coupled with continuing pressure in 1998, will see average let land yields slip further by the end of the year.

That could lead to negative investment returns for the first time since 1991, perhaps in the order of -1 to -5%, he predicts. &#42