Posted by: davidgarnerconsulting | March 23, 2010

Demand for Investment Farmland Much Greater Than Supply

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FARMLAND prices in the region are allegedly on the rebound as demand outstrips supply.
According to the latest Rural Market Survey conducted by the Royal Institution of Chartered Surveyors (RICS) the price of farmland in Yorkshire and Humberside rose in the second half of 2009 as land once again became an attractive investment, and land owners’ reluctance to sell pushed supply to exceptionally low levels.

RICS rural spokesperson, Andrew Fallows, of Carter Jonas in York, said: “The continued shortage of supply, particularly from commercial equipped and bare land, continues to underpin the market and drive demand, although the market is now generally settled compared to 12 to 18 months ago.

“Those with land understandably don’t want to sell it, and those without, or with a limited supply, are keen to get into the market and capitalise on its rising value. Couple this with the fact that farmers are increasingly optimistic about the outlook for agriculture and suddenly an investment in either pasture or arable land is a very attractive prospect.”

A total of 43% more chartered surveyors in the region saw demand for commercial land rise rather than fall in the six months to December last year.

This was up from 14% in the previous half-year and shows the growing appeal of land as an asset class.

Click here to Download a FREE Guide to Farmland Investment and Agricultural Land Investment

Demand for residential farmland also increased, but still remains in negative territory, with minus 43% of chartered surveyors reporting it rising rather than falling, compared with a negative 59% in the previous half of the year.

The RICS say demand is coming from speculators who view farmland as a stable investment, reflecting the fact that prices have remained resilient throughout the recession.

In addition, existing farmers are also looking to capitalise on an improvement in livestock prices and greater optimism surrounding the prospects for agriculture by acquiring land close by.

The survey also found that those with land in the region are keen to hold on to it and therefore very little is coming on to the market, which is helping to drive up prices further.

As a result, arable land prices per hectare rose in the six months to December last year from £12,973 to £13,591, with pasture prices remaining the same at £9,884.

Price expectations have improved, with 29% more of the area’s chartered surveyors expecting to see commercial farmland prices increase this year compared with a reading of zero back in the first six months of last year, with a negative 14% expecting to see residential farmland prices rise, compared with a negative 29% in the first half of last year.

Mr Fallows added: “There is a degree of uncertainty as to how the rural sector will fair this year, as the impending general election will have an impact on the industry, especially if more spending cuts and a further lack of funding is enforced.”

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Responses

  1. Very interesting article i look forward to reading more of them in the future.


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