Savills’ Charles Dudgeon and Luke French look to the future of the farm land market in Scotland
2011 market – key features
• With continued demand and a decrease in supply, average values have remained firm but with widening divergence. The best arable acres can reach more than £8,000/acre, secondary arable may be nearer £4,000/acre. Scottish buyers and local farmers are most active but the number of viewers from south of the border has increased.
• Farmland remains an attractive safe haven for private investors
• Of the 118 farms advertised in Scotland during 2011, only 18 were larger than 400 acres. Of these 18, fewer than half (44%) have sold; the remainder are still available or have been withdrawn
• Savills’ research shows that 31,377 acres were publically marketed in 2011, a decrease of 14% on same period last year
2012 outlook – main market influences
• CAP reform uncertainty could reduce farmland supply
• Bank credit availability will continue to affect demand for smaller, less commercial farms
• Global economic turmoil should support farmland
2012 outlook – what will happen to land prices?
We expect land prices in the arable sector to steadily increase. Buyers of secondary land are increasingly price sensitive so the gap between prime arable land and average prices may increase.
With supply likely to remain scarce for the first half of 2012 and demand not expected to falter, land prices are expected to mirror those of the past six months.
How much land will come to market in 2012?
Supply remains tight – we do not expect any major change in the short term, though less is more likely than more.
Easiest farm to sell in 2012
East coast arable farms equipped with modern building and attractive houses will continue to sell well, especially if capable of growing potatoes. Farms larger than 400 acres will attract national interest and competition with local farmers to secure a commercially viable unit.
Bare arable land will remain in demand from investors and commercial farmers.
Most challenging farm to sell in 2012
Lack of viability will make poorly equipped stock and dairy farms smaller than 200 acres difficult to sell. Farms where residential properties account for a significant proportion of value will struggle as purchasers are constrained by bank credit.
Sale highlight of the year
Morham Mains at Haddington, East Lothian has a Georgian farmhouse, good modern buildings, 444 acres of prime Class 3(1) arable land (468 acres in total). It was marketed for offers of more than £3.5m and sold well in excess of the asking price after only four weeks.