PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 12:14 UK, 27th Jun 2014, by Agrimoney.com
UK land prices hit record high, but growth to slow

UK farmland prices set fresh record highs, helped by strong demand from investors, although the rate of appreciation has eased, and is likely to remain at a slower rate, Knight Frank said.

Land prices in England, which accounts for the majority of UK farmland, rose by 2.6% in the April-to-June period from the quarter before to an all-time high of 7,517 per acre (18,574 per hectare), the property consultancy said.

In Scotland, prices rose 1.6% quarter on quarter to 4,329 an acre for average land.

However, the increases were markedly slower than those in the January-to-March period, of 6.4% in England and 6.8% in Scotland.

And, while prices will continue to grow, it will be at a slower rate, Knight Frank said, foreseeing values in England adding a further 6% over the next 12 months, a decrease from the 17% growth seen over the past year.

"I think values have plateaued in some areas, while there is room for more growth in others," James Prewett, the group's head of regional farms, said.

In Scotland, price growth will ease to 5% over the next year, compared with 8% over the past 12 months.

'Pensive market'

Knight Frank termed the Scottish market as "pensive", ahead of this autumn's referendum on independence from the UK, which has prompted some potential vendors to hold back on sales.

"I am not expecting a huge amount [of Scottish land] to come to the market this summer," said Knight Frank farm agent James Denne.

Nonetheless, the "fact that all the uncertainty hasn't caused values to dip underlines the inherent strength of the market", Mr Denne said.

"Supply is still very limited and demand remains firm."

The consultancy reported a "real appetite" for Scottish land from, particularly foreign, investors, lured in part by the potential for renewable energy from the likes of hydroelectric schemes.

'More savvy'

Investors are also displaying "buoyant" demand for English farmland, Knight Frank said, claiming a "number of inquiries" from funds, which were displaying greater sophistication in their requirements.

"Investors are becoming more savvy and better advised," Knight Frank said.

"Their knowledge of farming systems is growing.

"They are looking for opportunities where they can increase agricultural productivity and returns, rather than just purchasing land let under long-term agricultural tenancies, which has been the traditional investment target."

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