English land prices up despite looming Co-op sale

The farmland market in England got off to its best start to the year since 2008, Knight Frank said, highlighting strong demand and downplaying the threat from the swathe of Co-operative Group land about to hit the market.

The average price of English land rose by 6.5% in the January-to-March period, sending prices above £7,000 an acre for the first time, to £7,324 an acre (£18,098 a hectare), Knight Frank said.

That represented the strongest first-quarter growth since 2008, during the agriculture boom in the run-up to the world economic crisis, and the highest for any quarter since the April-to-June period of 2010.

And it reflected laregly demand from farmers which "have been particularly active so far this year at all levels of the market", sending prices in some sales to levels well above average.

One farmer paid nearly £10,500 an acre for 96 acres of arable land in Herefordshire, the western country where is based, while a pasture farm in Buckinghamshire sold for £8,730 an acre.

"The sales show the strength of demand across the country," Knight Frank said.

"Where there is competition, we are seeing very good prices being paid."

Large sale

Indeed, the property consultancy downplayed the risk to prices posed by plans by the Co-operative Group, the troubled banking-to-retail organisation, to sell its farms division, which covers 39,533 acres, of which about 17,808 acres are owned freehold.

The Co-op said in February that it had "decided that its farms are non-core and has started a process that is expected to lead to a sale of the business".

Farmland prices are widely viewed as having been supported in part by a shortage of land for sale, with volumes down by roughly one-half since 2000, according to rival agency Savills.

Knight Frank said that the Co-op sale, likely to appeal to the funds which have increasingly viewed farmland as an attractive diversification for their portfolios, "will be a good test of the investment market".

"I have a number of private investors and funds actively looking for more land in the UK and this could be an interesting option for them," said Tom Raynham, head of agricultural investments at Knight Frank.

"Despite the size of the sale, I think it is more of an opportunity for the market than a threat."

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