UK farmland has trounced shares and residential property as an investment over the last decade and "may well" double in price again by 2020, Knight Frank has said in a report flagging the return of fund buyers.

Land prices rose by 164% in the 2000s, compared with a 37% rise in the value of country homes and a 22% slide in major London-listed shares, the property consultancy said.

"Even prime London property, which saw especially rapid growth before the credit crunch, could only manage growth of 113%," Andrew Shirley, Knight Frank's head of rural land research, said, citing gold as the only major asset class to outpace farmland.

While the land market may pause ahead of a general election expected in June, "prices will continue to increase and may double before end of the decade", Mr Shirley said.

'Strong rationale' 

The market continued to be underpinned by a shortage of land up for grabs, with the area advertised for sale last year falling by 30% to less than 150,000 acres for the whole of the UK.

Demand from buyers, meanwhile, showed "no sign of abating", he said, flagging a "noticeable return" of institutional and private investors in the last three months of 2009, a quarter in which prices rose by 3.0%, quarter on quarter, to record high of £5,123 an acre on average.

"As the world population grows, eating habits change and more and more farmland is lost to development and degradation, the investment rationale behind farmland will remain strong," he said.

"Even the UK's Labour government, not traditionally perceived as having close links with agriculture, has now recognised that food security is an issue the UK has to face."

The government last week unveiled a 20-year food and farming strategy aimed at integrating policy on the sector for the first time since World War II.

The Knight Frank report comes a week after rival Savills said that there was more than £7.5bn waiting to be invested in UK farmland, and said prices were poised to rise by 5-6% a year to 2015.