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 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 Agrimoney.com 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
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
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."