PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 11:39 UK, 18th Apr 2011, by Agrimoney.com
Farmland prices in UK off to best start since 2008

Farmland prices in the UK got off to their strongest start to the year since the last crop price boom, in 2008, as an increasing number of buyers chase fewer properties coming to market.

The average price of average UK arable land rose by 2.3%, quarter on quarter, in the January-to-March period to an all-time high of 5,400 a hectare, with some farms achieving considerably more, Savills said.

"The thirst for productive, well located farmland has led to record prices," Savills director Alex Lawson said.

The growth in values reflected in part growing demand for land, with the consultancy reporting a 16% rise, year on year, in the number of applicants registering to buy farms.

"High crop prices and the fundamentals of feeding the world's population continue to drive the interest in farmland as an investment asset, especially at a time when the performance of many alternative assets is muted," the company said.

However, supplies of land put up for sale fell, by 8% in England to 13,500 acres publicly marketed, and by 22% in Scotland.

"Continued demand combined with a further reduction in the volume of available farmland has resulted in the best first quarter growth in farmland values since 2008."

Two-tier market 

Growth was particularly strong in arable land, and in the east and south west of England, where supply of land had been particularly short, falling by one-half or more year on year.

"The level of growth partly reflected the shortage of supply," Savills said.

The company added that, while it was sticking by a forecast of land prices rising by an average of 9.7% this year, the market was increasingly splitting between a premium market for higher-quality arable land and other plots.

"It is expected that growth in values will be diverse and largely related to quality," the company said, forecasting premium land increasing 15% in price, with lower-tier land appreciating by 4%.

Mr Lawson said that in the first quarter "several sales of substantial blocks achieved over 10,000 per acre and prime arable land is regularly achieving over 8,000 per acre".

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