Many investments, from the FTSE 100 to gold, have lost momentum, but the average value of farmland has grown by a staggering 209% in the past decade, according to the latest Knight Frank Farmland Index.
The quarterly study, which tracks the average price of bare, commercial farmland in England, reveals that values rose by almost 2% in the second quarter of this year to reach £6,421 per acre, putting overall growth for the year to about 3%. ‘Farmland has often been lumped in the "safe haven" investment category with gold, but it offers much more than just protecting wealth,' explains Andrew Shirley of Knight Frank. ‘Unlike gold [which has dropped by 21% so far this year], it offers a steady income and is far less volatile than investments such as equities.
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Even if its capital value was to decline, farmland will still have inherent value as a food producing asset. Plus, availability is still very limited, and it can be owned in a tax efficient manner.'
However, the market can achieve markedly different values. Savills' farmland index shows that prime arable land values in England grew by 4.4% to average £8,138 per acre, whereas Grade 3 pasture only saw a 0.9% increase to £5,531. Savills says buyers are paying greater attention to factors such as yield potential, but, despite this, Knight Frank predicts a further rise of 5% in the next year.
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