Locals buy lions share of Scottish acres in 96
By Louise Rose
SCOTTISH buyers dominated the land market in Scotland during 1996 although there was often a strong presence from English and Irish farmers at closing dates.
And the demand for arable land in the east coast has pushed prices up further with prime bare land now achieving up to £3100/acre.
"Many farmers are still desperate to take on more land," says Charles Dudgeon of agent Savills. "And this demand is closing the gap between the values for different classes of land with the marginal land looking increasingly expensive," he said.
Also BSE has restricted the volume of dairy farms marketed in the south-west with owners sitting tight waiting to see what the future holds and not spending.
"We have identified an enormous demand for the 200-acre dairy farms, especially from Irish farmers which will spill into next year and underpin the grassland market," he said.
Most farms sold by the firm went to existing farmers while 85% of sellers were moving out of farming due to retirement, financial reasons or due to inheritance, said Mr Dudgeon.
However the firm predicts that bare land values – which have risen by 110% in four years – during 1997 will level off at this years prices as a poor potato harvest, grain surpluses, the unresolved BSE problem and a strengthening £ effect potential buyers.
Although a recent improvement in the residential market could lead to a two-tier farmland market with units including a good quality dwelling and prime land selling at a premium.
"The amenity buyer is back with a vengeance," says Mr Dudgeon. "Income lost from falling subsidies and extensification payments will be replaced by improving property prices," he said.
Therefore values of the good quality units are unlikely to ease although the market for marginal land in the south-west might become less stable.
And with the date of next years election uncertain the supply of land during 1997 is unlikely to improve although there is still plenty of unsatisfied demand for it.
Also Michael Jones of Bell Ingram says better quality land values increased by 20% in 1996 with top prices for bare land now at £3500/acre – £1000/acre dearer than 12 months ago, although it would make economic sense to see a slight dip in values soon, he said.
"I suspect there could be quite a lot more on the market next year as there is a feeling that the market has peaked," said Mr Jones.
He has noticed a fall in the number of people offering for units suggesting that some of the demand now has been met.
"Earlier in the year usually between six to 12 offers were made for a farm and now its around two or three high offers," he said.
He sold over 1000 acres by Loch Tay, Perthshire, jointly with Savills for significantly in excess of the £795,000 asking price.
With interest in the whole and in parts, it sold in lots with the main house and 50 acres attracting an amenity buyer while the farms with a 2500-ewe capacity were purchased by an incoming farmer.
And a 240-acre grassland unit Wester House Byres, in the Borders, sold in lots for over the £485,000 guide, with the house and some land selling separately.
Selling agent Colin Strang Steel of Knight Frank says: "The residential buyer is returning especially from the south as communications improve and house prices in Scotland represent better value for money."
Also Mr Jones sold a 350-acre mainly arable investment farm in Angus. With an annual rental of £23,500, offers reflected returns on capital from 4-10%, with sale price showing a yield nearer 5%.
Annual volume of land advertised
Year to 31/10No of farmsAcres advertised% change% change
yr on yragainst 1990
Source: Savills research.
Current bare land values
(class 2 & 3.1)£2750-3100
Good arable(class 3.1 & 3.2)£2350-2750
Dairy/average arable(class 3.2 & 4.1)£1900-2350
Mixed farms(mostly arable)£1500-2000
Mixed farms(mostly stock)£900-1500
Source: Savills research.