Shortage boosts Scottish land market confidence

Confidence is running high in the Scottish farmland market despite the uncertainty of the independence referendum, land and CAP reforms, as Catherine Paice discovers.

Aberdeenshire farmland is selling very well, says James Presly of Aberdeen & Northern Estates. The shortage of good farmland available has helped prices, as well as confidence. In Aberdeenshire, arable land is averaging £5,000+/acre and pasture £3,500-4,000/acre. This trend is also being seen to a greater or lesser degree elsewhere in Scotland.

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A recent survey highlighted this, but indicated that confidence could be eroded, at least initially, if Scotland became independent. Savills’ survey of farmers attending its spring seminars in East Lothian, the Scottish Borders, Perth and Ayr, found that 46% believed farmland values would continue to rise. Although 48% thought they would plateau, only 6% thought they would fall.

The farmers in the survey nevertheless said they worried about the value of land in an independent Scotland, with roughly two-thirds believing it could fall.

This summer Savills will be bringing 12 farms to the market, ranging from blocks of arable land to a 1,000-acre upland farm. The launch of a 5,500-acre deer forest on the north west coast is imminent.

Prices have risen by 11% to an average of almost £4,300/acre, according to the Knight Frank Scottish Farmland Index, taking 10-year growth to 220% and outpacing England’s 210% growth. Interest may be extending further – there was a 43% increase in total searches for all types of Scottish property on Knight Frank’s website last year.

James Butler at Strutt & Parker, however, points to the range in prices being achieved (see table).

“I think it is a bit early to see how the market will react this year,” Mr Butler said. “The key driver is that supply is relatively low compared with 10 years ago, and there is also historically a reluctance to sell during times of change, including CAP reform. But we spent the winter months talking to buyers and I am certain that they are still there to buy in Scotland.”

An analysis by Strutt & Parker of the 2013 market indicated arable values rose by an average 13% and pasture by 2%. The proportion of farmer buyers, as opposed to lifestyle or investor, was up from 64% to 76% of total buyers. Forty percent of farms were snapped up by English buyers.