Farmland Update

3rd July 2013

Farmland values have risen by approximately 20% since the start of the recession, from £7,400 per acre to £9,000 per acre.

Farmland continues to outperform many other asset classes over the mid to long term, although the recent bounce in equity values means that the FTSE 100 has performed more strongly over the past year as investors recover some of their appetite for risk. Despite the slight recovery of the Stock Market, farmland will continue to have a valuable role to play in investment portfolios going forward. Whilst stocks and shares are back in favour, the markets remain volatile. Land offers something more tangible, yet still has the potential to provide good capital appreciation.

In addition, the high commodity prices witnessed since 2008 have driven farm incomes up however, this has to be tempered with the difficult weather conditions over the course of the last 18 months and as outputs suffer, the cash flow position of many farming businesses has been put under increasing strain.

For some farming businesses, 2013 could be the third successive difficult harvest and it is feasible to think that some may look to take advantage of strong land prices. It is anticipated however, that more will continue to expand and it is this demand, coupled with increased demand from investors which intensifies the competition for fewer acres.

There continues to be a clear divergence between prime quality land in the right location and poorer quality land. Due to the shortage of land coming to the market, buyers continue to be increasingly discerning. As such the market is a lot more sensitive and poorer quality land that is unrealistically priced will struggle to find a buyer in the current market.

The Land & Farms team of George F White launched to the market in June a total of 2,500 acres across the North of England with a total value of approximately £15 Million. The majority of the properties comprised equipped holdings ranging from extensive upland farms to lowland commercial arable units. The early interest has been from a mixture of purchasers including local and national farmers with investors expressing a keen interest also. One of the properties launched to the market in June was Morton Grange situated near Northallerton, North Yorkshire. Morton Grange represents a rare opportunity to acquire an excellent agricultural and sporting estate in a sought after location. The property briefly comprises a principle four bedroom farmhouse, a useful range of traditional and modern general purpose buildings with grain storage capacity for approximately 2,800 tonnes and land extending to 216.07 Ha (533.92 Ac).

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