Investor Demand Driving Farmland Prices, says Knight Frank

By +Peter Mindenhall Friday 19 April 2013 Farmland continues to be seen as a preferred property investment option for many buyers, according to a new report. Research conducted by Knight Frank indicates that average farmland values in England rose by 1.5 per cent in the first quarter of 2013 to GBP 6,307 per acre. Increased demand for land has seen prices increase by four per cent in the last 12 months and 207 per cent over the last ten years. Knight Frank noted that farmland continues to outperform many other asset classes over the mid to long-term, predicting a further increase of between four and five per cent in the next 12 months. The firm said that although investors – fed up of poor returns – seem to be moving away from low-yielding ‘safe-haven’ investments, such as AAA-rated government bonds, there continues to be strong interest in farmland. Some of this demand can be attributed to famers paying a premium to secure land adjoining, or close to, their existing units. Tom Raynham, from Knight Frank’s Farms & Estates team, claimed that farmland still has “a valuable role” to play in investment portfolios. “Even though stocks and shares are back in favour, the markets remain volatile,” he stated. “Land offers something more tangible, yet still has the potential to provide good capital appreciation.” Mr Raynham said that for private investors, it also offers significant tax and amenity advantages. “This combination of benefits has seen increased activity in Lincolnshire, the UK’s arable heartland, with some large blocks of good arable land recently making over GBP 10,000 per acre,” he noted. James Prewett, head of regional farm sales at Knight Frank, claimed there is still a shortage of supply and, while more marginal land may have a lost a little of its value, demand remains strong for commercial units. Taylor Scott International