Investor demand is continuing to help drive up the price of farmland, according to Knight Frank.
The average value of English farmland rose by 4% in the third quarter of the year to £6,678/acre – a new record high – according to the latest results of the firm’s farmland index.
“We are seeing a steady increase in the number of enquiries from individuals and funds, both in the UK and overseas, looking to diversify their investment portfolios,” said Tom Raynham, head of Knight Frank’s agricultural investments team.
“Large blocks of good arable farmland, preferably over 1,000 acres, are most in demand,” he said.
Capital growth is a key driver, according to Mr Raynham, with prices having risen by 222% in the past decade and predicted to rise by at least 5% annually over the next three years.
Investors, however, were also looking more closely at annual yields, he added.
“People start to get very interested if there is also the potential for additional income from the likes of renewable energy or a diversified farm business.”
A resurgence in agricultural research is also adding to the sector’s investment potential, he said.