Farm land in England set to rise by 5% over next 12 months, says Knight Frank experts
|Wednesday, 10 July 2013|
The average value of farm land in England rose by almost 2% in the second quarter of 2013 to £6,421an acre, according to the results of the latest Knight Frank Farmland Index.
This takes growth so far this year to just over 3% and the past decade to 209% and analysts say that over the short term farm land is performing better than gold and even over 10 years the performance gap is narrowing rapidly.
While large blocks of good quality arable land unencumbered with high value residential property are still most in demand, investors are also interested in farms that include large, efficient poultry and dairy units in addition to which opportunities for diversified income streams such as renewable energy schemes a very appealing.
‘We have a number of clients who have committed a serious amount of money to invest in farm land. While gold and farmland are often classed together as safe haven investments, the performance of farmland shows it has much more to offer, while the drop in gold prices has highlighted that it can be a very volatile commodity,’ said Clive Hopkins, head of Knight Frank’s Farms and Estates team.
‘The investors we are dealing with now like diversity and tend to have much more of a global perspective. Some of them will even be looking at details such as the demand for powdered milk in China and its implications for global dairy markets,’ he explained.
‘Despite the increase in land values, setting a sensible guide price is still vital to help achieve competitive bidding and the best prices. We recently had offers of over £10,000 an acre for the farmland on an estate in the west of the country. However, the market can still be very patchy depending on location, land quality and type,’ he added.
More land could come to the market over the next few years, he predicts. ‘Wheat prices have weakened and poor autumn planting conditions in 2012 mean this year’s harvest may be the second or even third poor one in succession for some farmers. This may encourage a number to sell,’ he pointed out.
Despite this, the Knight Frank Farmland index predicts values will climb by another 5% over the next 12 months, as demand is such that the market will cope with the extra supply.
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