Property developers’ diversification into farmland is pushing up land prices, according to Savills.
At a briefing this morning, Savills said that average farmland values were set to grow at around 6% pa year over the next five years.
Farmland values were being driven by land quality, type and location as buyers increase in diversity, said the agent, with property developers, business investors, renewable energy companies, lifestyle buyers and wildlife trusts all showing an increased interest in the sector.
Savills head of rural research Ian Bailey said that farmland was an opportunity for property developers to broaden their horizons.
“Farmland is worth looking at as an investment to diversify your peak focus,” said Bailey. “As far as portfolios and institutions go, putting some money towards agriculture is a good idea. We have seen a lot more interest in the past couple of years. People have been more interested in straight commercial arable farms because of the income return.”
Alex Lawson, director of farms and estates at Savills, said: “There is a huge diversity of people that want to buy farmland for a huge diversity of reasons. When you combine that with a tiny trading supply, inevitably supply and demand imbalances are going to result in an increase in prices.”
At the end of November supply across Britain was 143,000 acres, 51% less than the availability for the same period in 2000.
Prices have risen the most for prime arable land in the East of England, with average prime arable land reaching £9,600 per acre in areas such as Norfolk and Suffolk, representing 20% price growth.
Since the end of the recession, buyers had been returning to farmland as a lifestyle asset, said Savills. It forecast that the country residential market would begin its recovery next year, with areas such as The Cotswolds becoming popular again.
“The status side of it is appealing,” said Bailey. “It’s tangible, not like buying gold or commercial properties; it’s a completely different asset.”
