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Value of farm properties in England rising for first time since summer 2008, report shows

However, values are still about 10% lower than a year ago and the farmland market has been very quiet with less than half of all land for sale being marketed within the final quarter of 2009, the report from Smiths Gore shows.
‘The picture across the country is of very limited amounts of land for sale and pent up demand from farmer, non-farmer and investment buyers,’ said Jason Beedell, Head of Research.

Some of the increase in values is due to smaller farms being marketed. ‘Our database of sales clearly shows that smaller farms have higher values per acre, as the value of the house and buildings boosts the value per acre. Given this, careful lotting of farms is essential to maximise their overall value,’ explained Giles Wordsworth, Head of Farm Agency.

Transactions in 2009 were lower than in 2008 with 7,800 acres of equipped farms marketed in 37 sales, so an average of 210 acres. This is much lower activity compared with the year before when 19,100 acres were marketed, in 62 sales at an average of 308 acres per sale, the report shows.

Bare land values dropped slightly across England, by 2%, to an average of £4,800 per acre, demonstrating a return to values previously seen at the beginning of the year, the research found.
‘The view from our farm agents around England are that values have remained broadly the same so this small drop may be a result of the small number of sales and paucity of land for sale in the quarter,’ said Wordsworth.

But again transaction volumes were low with 2,600 acres marketed in 2009, less than half the amount in the same quarter in 2008, when 5,700 acres were sold. There were also many fewer sales, 26 compared with 43.
‘Our view is that the value of bare land remains firm at £4,800 per acre across England. It has stayed between £4,800 and £4,900 for the past year and, despite the credit crunch, is about 30% higher than it was at the end of 2007,’ said Beedell.

Overall Smiths Gore expects the farmland investment market to continue improving in 2010. ‘There remains strong demand and a lack of suitable stock. Currently we are on the search for suitable investments both of secure tenanted properties and estates as well as land with long-term development hope. Although yields remain low, investors are attracted to the tax advantages and potential uplifts in value,’ said Gerald FitzGerald, Head of Property Investment and Valuations.

The report also highlights regional differences. It says there is a noticeable decline in the number of properties and land areas being brought to market in the southern regions of England, most notably the South East, South West, East Midlands and East of England. While the number of properties and areas of land in the North West, West Midlands and Yorkshire remain comparable to 2008.