Farms and estates marketed during the first three months of 2019 have met strong interest from potential buyers despite the economic and political uncertainty, according to land and property specialists Strutt & Parker.
Michael Fiddes, head of estate and farm agency, said Brexit uncertainties have led to a more cautious market sentiment among vendors with less land marketed in Q1 than in the past two years, but commercial farmland and residential estates in the right location are in strong demand.
“It has been a quiet start to the year in terms of the number of farms that have been launched on to the market, but tight supplies mean that demand remains strong for the right offering.
“We are seeing considerable interest in the 1,900 acres, spread over four farms and estates, that Strutt & Parker has brought to the market in England this quarter, particularly from buyers with rollover money to invest and private and institutional investors.
“A property in the north west that launched in mid-March had 15 viewings in the first couple of weeks alone.”
Mr Fiddes explained that a key trend in the current farmland market is the level of interest from buyers funding their purchase with money generated from a source outside of farming. These range from farmers who have rollover money after selling land for development, to high net worth individuals who want their own slice of the British countryside.
“This means that location, rather than the quality of the land, remains the main driver of demand.
“Many of these buyers are focused on factors such as privacy and the enjoyment that they will get from the land, rather than generating profits from farming activities. Others will be focused on the tax benefits and may be tied to a very specific location. Some will be focusing on the potential to add value with a diversified income stream.
“This is why we are seeing a wide range of values in the marketplace.”
Mr Fiddes warned that the small number of sales which complete in Q1 mean that average prices should always be treated with caution.
According to Strutt & Parker’s Farmland database, the average price of arable land sold in Q1 was £9,100/acre, compared to a 2018 average of £9,300/acre. However, prices ranged from £6,000/acre to close to £16,000/acre.
The average value of pasture in Q1 was £7,000/acre.
“Very few farms came to the open market in East Anglia in the first quarter, but Strutt & Parker is marketing a significant proportion of the acreage that has been launched and interest has been positive with good levels of viewings to date. Values continue to be variable across the region. While there’s a mix of local farmers, investors and residential buyers in the market, it is location that is determining the farms achieving the best values, for example, in areas where there is little historic supply. Many of these purchases are being funded with non-farming money, from external investors or existing farmers with development funds to spend. Larger farms are still proving popular and there is a noticeable shortage of commercial arable units of 750-1,000 acres. Although we expect more farms and acres to come on to the market this spring, supply will remain tight so we anticipate prices will remain relatively stable with buyers still hungry to purchase land in the right location.” Charles Wadsley, East of England region
“There is strong interest in quality farms, particularly those with diversified or specialist enterprises, as buyers seek to maximise the return on their investment. For example, we are handling the sale of 800 acres of Grade 1 land in Lancashire, currently growing commercial turf, which has received a considerable amount of interest. While heavy-land arable farms in non-core areas are sticking on the market, there’s a shortage of medium-sized mixed farms in accessible areas. Generally, arable land is selling for between £6,000/acre and £11,000/acre, with pasture ranging from £5,000/acre to £8,000/acre. But over the coming months I believe values could increase as buyers compete to secure productive and diversified holdings in the region.” Will Parry, North region
“We are seeing strong demand from rollover buyers and profitable farmers looking to expand their operations. They are mainly focusing on buying larger blocks of bare land and farms where there is a mixed income stream and potential to improve. Arable land is ranging from around £7,750/acre to £11,000/acre and grassland from £6,000/acre to £9,000/acre. Once the weather improves and there are leaves on the trees we should see an increase in supply, but not to a level which will impact on prices in the short term. Best-in-class farms, where the current owners have invested in improvements, will continue to sell well. Despite the current uncertainties, our recent experience is that demand is certainly there from buyers and sensible pricing is the key to attracting interest.” William Morrison, South West region
“We are probably seeing the widest range of prices paid for land in the East Midlands than any other region of England, with location being the key driver. Over recent months we have seen prices range from £6,000/acre to nearly £16,000 acre for blocks of arable land – which has no direct link to the soil quality. There are still farmers with rollover money to invest, particularly where there is a lot of development occurring, for example in West Leicestershire and North Warwickshire. These buyers are being cautious in their approach and quite specific about their requirements, generally seeking land to add to their existing farms and there is a distinct lack of supply. Very few farms came to the market during the first three months of the year and while we are expecting more farms to come to the market in Q2, supplies will remain relatively tight.” Sam Holt, East Midlands region
“The general sentiment within the region seems, on the whole, to be positive despite the goings on in the political world. A handful of early launches have given rise to a good level of activity in terms of viewings. From a buyer’s point of view, the good news is that we believe there is going to be more stock on the market compared to this time last year with at least three quality commercial farms in the Cotswolds of over 500 acres each due to be marketed this spring. Further west there is also a good selection of farms including two dairy farms and some quality residential estates in the pipeline.” Matthew Sudlow, Central and West Midlands region
“The south east of England has been unusually quiet during the first quarter of 2019, with very few farms over 100 acres coming to the open market in Kent, Sussex or Surrey. There are a small number of farms still available in the region, with land in less desirable areas or with an unrealistic guide price handing over from 2018. But farms which have obviously received investment continue to sell well and if a 500 acre+ arable farm was put up for sale tomorrow then there are buyers who would definitely be interested. We are in touch with a number of buyers who have funds to rollover into new agricultural opportunities; they are prepared to move location, as well as add to an existing farming operation. Prices are currently averaging around £8,500/acre for arable land and £7,000/acre for pasture.” Will Whittaker, South East region