Deals on arable land are being done at over £5,000 an acre and in some cases over £6,000 per acre says the Arable Land Market report from Knight Frank. Across the country there is renewed confidence amongst farmer, it concludes.
'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 Knight Frank.
'The increasing political focus on global food security is also giving farmers confidence that their industry offers them a long-term future,' he added.
It is the more productive and profitable land that will be keenly sought after as farmers recognise that European Union support for farming via the Common Agricultural Policy will inevitably diminish and that they cannot buy more land simply for the sake of owning a bigger farm, the report says.
Clive Hopkins, head of farms and estates at Knight Frank said he does not expect land values to return immediately to the highs of £7,000 an acre but he expects prices to rise steadily over the next few years.
'Investors, from both the UK and abroad are active again now that their credit flows are starting to free up again as the banking system slowly unlocks itself. Compared with other more volatile asset classes, farmland looks a secure long-term investment,' he said.
'Farmers can now see that some of the froth at the top of the market has subsided and perceive that farmland is looking good value again. Ownership could also act as a useful hedge if, as many are predicting, we re-enter an inflationary cycle within the next 24 months,' he added.
