FARMLAND in Wales is becoming an attractive investment as demand increases and supply levels fall, says the latest Rural Market Survey published by the Royal Institution of Chartered Surveyors.
The survey found landowners are keen to hold on to it and prices are rising as a result.
Demand for residential farmland has also started to pick up and the call for commercial land continues to grow as investors view farmland as a stable resource – prices have remained resilient throughout the recession.
RICS says established farmers are also looking to capitalise on rising livestock prices and greater optimism on prospects for agriculture by acquiring land close by to expand existing operations. This is expected to push up land prices throughout 2010.
RICS Wales director Cathy McLean said: “When prices were rising two years ago it was mainly being fuelled by hobby farmers, buying up rural retreats with city bonus money and inflating the market. However, these latest results indicate that it is now farmers looking to expand and investors who see it as a viable business or investment class that are fuelling the rise in demand.”
Ms McLean said interest rates are expected to remain low for the foreseeable period, which means there is likely to be increasing interest in farmland from non-commercial buyers seeking higher returns on alternative assets.
“The fall in supply means that the market is exceptionally thin with surveyors expecting such market conditions to persist which in turn will help drive prices during 2010,” she said.
“Those with land are loath to dispose of 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.”
James Andrews of Llywelyn Humphreys, Carmarthen, said a number of good sized farms were sold in West Wales over the last six months. “This supply has now virtually dried up and there are still purchasers actively seeking farms,” he added.
Gareth Lloyd of Watts & Morgan, Cowbridge, said purchasers were viewing land as “a better investment than other shares or commercial property”.