Farmland prices up by 30%

Research by Savills shows that in England, the average value for all land types is now £3700/acre, up 87% on prices at the beginning of 2004 while in Scotland the current average of £2750/acre is now double that of 2004. In Wales the average land value is now £2903/acre. However, these average figures mask some substantial highs achieved for farmland, say Savills. In Scotland the best deals have achieved anywhere between £5000 and £6000 plus for an acre of arable land on the East coast, where a shortage of supply has driven up values. In the central belt of England, demand for commercial units has been the key driver with regional highs of more than £4500/acre achieved in competitive situations. In the East of England, Savills' farm agency teams have brokered deals on over £110m of land and property over 26,500 acres. Danish and Irish buyers have been competing with local farmers driving land values upwards. However, interest is also emerging from Italy and Germany. On the supply side there has been little change to the volume of land publicly available in Great Britain since last year with figures to the end of November at 184,229 acres for 2007 compared to 179,013 acres for 2006. Demand for farmland has increased with a number of investment funds now in the market for both UK and overseas land. These investors are competing against the growing number of farmer buyers, who this year represented 50% of all buyers. Over two-thirds of all farmers who purchased land gave expansion as the reason for purchase, which Savills expect to continue into 2008 as commodity prices remain significantly higher than in 2006. Non-farmers whose primary objective for a purchase is lifestyle continue to be a major feature of the market taking about 35% of the market share. Jessica Simpson of Savills says: 'It is unlikely that 2008 will see a great deal of additional land traded, although those selling before April 2008 will potentially benefit from a lower rate of tax before the changes in Capital Gains Tax take hold. The continuing lack of supply and sustained demand for land is likely to push values up further and we are forecasting growth for next year of between 10 and 15% for the best land in the most highly sought after locations.' * farms for sale