Farmers are feeling renewed confidence in the arable market which is showing signs of recovery after almost nine months of falling prices, says Knight Frank. Prices seem to be stabilising around £5000/acre, and reaching £6000/acre where there is special interest, according to their latest report on the arable market.
‘Although crop prices are still some way from the peaks seen last spring, which helped to push land prices to record highs, cereal markets are slowly edging upwards after falling sharply in the second half of 2008,’ said Andrew Shirley, head of rural property research at the agent.
‘The increasing political focus on global food security is also giving farmers
confidence that their industry offers then a long-term future.’
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Clive Hopkins, head of Farms and Estates at Knight Frank added: ‘Investors, both from the UK and abroad, are also active again now that their credit flows are starting to free up again as the banking system slowly unlocks itself. Compared with more volatile asset classes, farmland looks a secure long-term investment. Ownership could also act as a useful hedge is, as many are predicting, we re-enter an inflationary cycle within the next 24 months.’
Mark Lawson from property buyers The Buying Solution commented: ‘We have purchased over 3,000 acres of land since August last year, all of which has been bought by wealthy city-based individuals or captains of industry, rather than ‘traditional’ farmers. Land ownership fulfils a deep-routed desire in many of us to own a tangible asset which can be enjoyed in many ways – riding, shooting, growing produce and so on. These individuals are not only buying for their love of land, but also view land as a wise investment for now and for future generations. As one client recently said to me: ‘If all the worlds systems fail as predicted, at least we will still be able to grow a potato or fatten up a pig for the family’
‘Although yields are not particularly exciting at around 2-3%, land prices are looking stable, and yields are significantly better than the current bank saving rates and stock market returns. In addition, agricultural land can be highly tax efficient with the ability to pass on the asset free from Inheritance Tax. ‘
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