Sharp rise in let land returns

Returns from let agricultural land rose sharply in 2007, according to new figures from the Smiths Gore/ Carter Jonas Investment Property Databank.

Let land generated a return on investment of just over 25% last year, although this was mainly driven by big growth in the capital value of agricultural land.

Capital value growth was worth 23% of the total return, with income from rents and other sources worth just over 2%, a value which has declined steadily over the past decade.

The figures show that let land gave investors a better return than commercial or residential property offered, as well as gilts and equities.

Smiths Gore’s Gerald Fitzgerald acknowledged that increasing capital values were driving returns, but said there was scope for rental incomes to increase as agricultural rents were reviewed this autumn. “Land values have risen significantly in the past 12 months and there is a lot more confidence generally about commodity prices in the medium to long term.

“Food is on the agenda again and we’ve moved away from the prevailing conditions of the past decade. Talk of food price inflation is misplaced a lot of this is catch-up.”

More land was marketed publicly in 2007 than the previous year, with a number of entire estates being sold, the index showed.