Growth in English farmland prices, already at a record high, is to slow this year but
will beat the
rates of appreciation seen in 2011 and 2010, Knight Frank said.
Farmland prices in England, the most important UK market, will
grow by "nearly" 6% this year, the property consultancy said, an estimate in
like with the forecast of "around" 6% growth unveiled by rival Savills last
The ongoing strength in the market - even as prices of gold,
with which farmland is often associated, have faded – illustrates the appeal of
land beyond being a so-called "safe haven" investment, made popular by the
global financial crisis.
English farmland values actually accelerated growth last
year, to 11.0% from 2.7% in 2012, while gold prices lost nearly 30%.
"This ongoing performance highlights why land is
increasingly being looked at as a potential investment by wealthy individuals
and funds," Knight Frank said.
"Not only does it act as a defensive and inflation-hedging component
of portfolios, but can also offer steady and reliable capital growth."
Indeed, the group, while noting that the market was marked
by "strong regional differences", identified the strongest demand for bigger
deals of appeal to funds.
"I think we will see further price growth for larger blocks
of arable land, especially those of interest to investors," Knight Frank said.
Last year's price rise lifted the average farmland price to £6,882
an acre (£17,005 per hectare), on the consultancy's figures.
However, large blocks of high-quality arable land "are
changing hands for significantly higher sums than the average reported by our
index", said Tom Raynham, head of Knight Frank's agricultural investment acquisitions
"Serious investors are increasingly prepared to do off-market
deals to secure the right investments," Mr Raynham said.
"Prices have exceeded £10,000 an acre in some cases."
The comments came hours after Creighton University unveiled
a deepening reversal in US farmland prices, following rapid price growth over
the last five years.