An extra 10,000 acres of farmland was publicly marketed in the UK during the first nine months of 2008 compared with 2007, an increase of 6%, according to Savills Research.
The acreage, which includes everything advertised in the national press, amounts to 168,000 acres compared with 158,000 acres during January-September 2007.
But the extra acres, together with a significant volume marketed privately, appear to be taking their toll on values and the banking crisis is also starting to affect buyer confidence. To offset that, agents still report acquisitive money looking for commercial farms, and an increasing number of enquiries from potential investors looking to move their money out of the reach of the banking crisis and into farmland.
The largest increase in the supply of land has been in the east of England (+59% year on year), where Brown & Co was relieved to have completed the sale of Waite Farm, with almost 1000 acres of Lincolnshire soil near Boston – to an investment fund. It was sold for close to its £7.5m (£7500/acre) guide, Brown & Co’s James O’Brien said.
Welland House Farm at Surfleet, near Spalding, guided at £3.5m, has also sold, subject to contract, to a local buyer. But 264-acre Glebe Farm at East Keal, Spilsby, has been less fortunate. An agreed sale for the grade 2 and 3 bare land fell victim to the credit crisis and is back on the market, with the same guide price (£1.35m), through Brown & Co.
At just over £5000/acre, this seems to have settled as the benchmark valuation for arable land nationwide. Savills’ Farmland Value Survey shows that the average value for all types of farmland soared by 27%, across all regions between January and September, adding to the 29% growth recorded in 2007.
However, all this year’s growth took place in the first half of the year, with values easing by 1.6% in the third quarter.
- Farmer buyers fell to 42% from 53% in 2007
- Number of farms being bought for expansion fell from 53% in Jan-Sept 2007 to 45% this year
- Investment as the primary motive to buy was higher in the first three months of 2008 (27%) than in 2007 (16%)
- Danes represented only 3% of buyers in the first three quarters of 2008, down from 10% in 2007