Thursday, August 22, 2019

Eastern region bucks national trend on farmland sales

May 1, 2019 by  
Filed under Property

East Anglia accounted for 15% of the farmland put up for sale in the UK during the first three months of this year, according to latest research from Savills.

Some 1,120 acres of farmland were publicly marketed in the region between January and March 2019, said the land agent – a drop of 8% compared to the 1,210 acres put up for sale during the same period last year.

But the figure is up on Great Britain as a whole, which saw a decrease of 28% compared to the first quarter in 2018. The average value of prime arable land in the eastern counties remained relatively stable, falling just 0.9% to £8,690 per acre in the first three months of the year.

Quality farmland

Despite challenging market conditions, this shows there is still a demand for high quality farming businesses – with more land due to come onto the market later in the year, said Christopher Miles, from the rural team at Savills, Norwich.

“The first quarter of any year tends to be relatively [quiet] as most sellers prefer to wait and launch their property in the spring so the figures are not wholly unexpected. But it does appear that current political and economic uncertainty has slightly muted the supply of land coming onto the market.”

Mr Miles added: “Undoubtedly there are some significant challenges ahead for farming businesses but until the future farming policy is ratified, it is difficult to forecast how the farmland market might be affected.”

That said, it was clear there was still appetite for well diversified or high quality commercial farming businesses and the best amenity estates. Premiums were likely to be paid for top quality properties, said Mr Miles.

“In this tight market, we are getting more calls through our network nationwide and with the continuing weakness in the pound we have seen an increasing number of international buyers on our books.”

Roll-over investors

Demand is strong from forward looking farming businesses looking to expand existing operations and roll-over investors seeking new opportunities. Meanwhile, non-farming buyers are looking to invest away from riskier asset classes and there is a rise in interest for amenity property.

Nationally, the supply of land in the first quarter of this year was 28% less than in the first quarter of 2018 and 40% lower than the average since 2000. This is the lowest acreage since Savills analysis began in 1995.

Adrian Wilson, from the rural team at Savills Cambridge, said: “With very little activity and consequently little transactional evidence, it is no surprise that our farmland value survey has recorded very little movement in average values since the end of last year.”

Depending on location, average values across Great Britain remain stable at around £7,500 to £8,800 per acre for prime arable and £5,500 to £7,000 per acre for average quality grassland. Savills expects these average values will remain relatively stable throughout the year.