Monday, July 15, 2019

Farmland values polarised amid ongoing uncertainty

July 2, 2019 by  
Filed under Property

Average rural land values remained broadly flat in East Anglia during the first quarter of 2019 according to new data from Carter Jonas.

Data from the firm’s team in Cambridge showed that regional variations were apparent, with buyers and sellers remaining cautious due to Brexit uncertainty. The languid market has impacted on pricing levels, said Carter Jonas.

Whilst transaction levels traditionally decrease during the first quarter of the year, there has been a significant reduction in activity across the sector. Since the end of March, the number of farms offered to the market has increased, but with limited evidence of deals done yet.

In East Anglia, arable land values average £8,500 per acre (£8,719 nationally) with pasture land commanding £6,000 per acre (£6,803 nationally). But buyers are still keen to acquire land for the right price and limited availability has restrained the market.

Assets that are best-in-class, well-located or offer development potential remain attractive, said Mark Russell, of Carter Jonas Cambridge. But percentages continue to hide polarisation with the same parcels continuing to achieve over £10,000 per acre.

Mr Russell said: “Limited supply and wider economic and political concerns have caused people to take stock, with many waiting for clarity over Brexit before launching or buying assets, others are taking advantage of being into the market early.

“Faced with the heightened level of uncertainty over the past few months, these findings are not unexpected. In the current climate, demand for land is being driven by location and opportunities to add value and diversify.”

Land with development potential commanded a price premium, particularly when compared to pure agricultural land values. An ongoing relaxation in planning policy had unlocked more opportunities for the development of agricultural land

Developers and house builders, on the whole, were willing to absorb any additional costs, said Mr Russell. “In many areas, rollover buyers continue to stimulate activity, looking to acquire in the locality of their existing holdings.”

Bank support remained available for agricultural purchasers, Mr Russell added. This was reflected in debt levels which are at record highs. Low interest rates continued to benefit the sector and there was clear evidence of purchasers looking at long term fixed rates.

“While we cannot avoid the current challenges impacting on the market, we are starting to see signs of improvement,” said Mr Russell. “Buyers are continuing to drive activity and some land parcels are attracting premium prices.”

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