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Farmland values are rising at their fastest rate since 2014 – outperforming the residential property market in London, suggest the latest figures from Knight... Land values outperform London property market

Farmland values are rising at their fastest rate since 2014 – outperforming the residential property market in London, suggest the latest figures from Knight Frank.

The price of bare land rose by almost 4% in the first quarter of this year, while annual growth hit 14%, according to the Knight Frank Farmland Index. This compares favourably with other investments, it says.

Only gold – which has seen a typical “safe-haven” bounce off the back of the Russian invasion of Ukraine – has performed more strongly over the past 12 months – as investors seek out assets classes that act as inflationary hedges.

Commodity surge

The volume of publicly advertised land for sale so far this year is about 50% below the levels seen in 2021, itself an historically sparse year. Several additional dynamics that could lend momentum to the market have also emerged.

Following the surge in commodity and energy prices  created by the war in Ukraine – around a third of the world’s grain exports are shipped from Black Sea ports – inflation is spiralling and food security has risen to the top of the political agenda.

A lack of supply and strong demand from a wide range of purchasers, particularly rollover and conservation-motivated buyers, continue to support prices. Buyers also have an eye on land as a source of environmental and carbon credits.

Green credentials

William Matthews, Knight Frank head of farms and estates, said: “We’ve seen a significant increase and change in the profile of purchasers looking to acquire land. There is now a far more diverse pool of buyers looking for farmland.

“Alongside traditional and land rollover buyers, many buyers are now looking to acquire land with the intention of environmental enhancement. This is all happening against a backdrop of a significant lack of stock, with opportunities few and far between.

“In light of this, now more than ever, landowners should be looking at their green potentials and credentials for their farms. The new buyer profiles and shortage of stock have set up a strong market for those thinking about selling.”