THE farmland market in England has gained further ground this year with the average price of bare agricultural
land rising by almost two per cent between January and March – to break the £8,000/acre barrier for the first
time.
An acre is now worth £8,059, according to the Knight Frank Farmland Index.
Values have risen by 10 per cent over the past 12 months and by 192 per cent over the past 10 years.
This compares with 10-year capital growth of 138 per cent for the prime central London residential market, 40 per cent for the FTSE 100 (despite the index hitting its own record high earlier this year) and 250 per cent for gold.
An imminent general election, particularly one with so many possible outcomes, might have been expected to
cause the market to pause for breath, but it appears the appeal of farmland is overriding the uncertainty.
The market, however, continues to separate into two clear sub-markets, each with their own distinct performance trends.
Leading from the front are large blocks – ideally over 1,000 acres – of arable land that are being eagerly sought
after by investors. Demand is so strong that prices upwards of £12,000/acre are regularly being paid and even £15,000/acre has been achieved on a number of occasions.
The ability to invest a significant amount of cash into an asset that will not disappear and has good long-term
potential for capital growth seems to be the main driver for investors, and the colour of the UK’s government is
not a major consideration.
For the farmer buyer, low commodity prices are probably of more concern than the election. Although they are
still prepared to bid strongly, farmers are becoming slightly more cautious above the £10,000/ acre mark.
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