Download - Farmland Market Review - Oct to Dec 2011
Review of the English farmland market
smithsgore.co.uk
This review is based on ourdatabase of all publicly
marketed farmland over 50 acres, collated by our research
team, and commentary on regional markets from our
farm agency team
Contacts
Our regional valuers would be pleased to give your more information about the land market in your region or county. Please do not hesitate to contact them:
North East Iain Welsh, Darlington Office 01325 [email protected]
North West Simon Waller, Preston Office 01772 [email protected]
Yorkshire and Humber Sam Tydeman, York Office 01904 [email protected]
West Midlands Harry St John, Oxford Office 01865 [email protected]
East Midlands Giles Wordsworth, Oxford Office 01865 [email protected]
East of England Bennett Swayne, Newmarket Office 01638 [email protected]
South East David Slack, Maidstone Office 01732 [email protected]
South West Simon Derby, Taunton Office 01823 [email protected]
If you have any questions about the review, please contactDr Jason Beedell, Head of Research, on 01733 866562 or [email protected]
October – December 2011
The key points are:
• Values for equipped farms and bare land continued to rise, so they have now risen continuously since the summer of 2009
• 2011 was the first year more than 100,000 acres of equipped land was for sale since 2008 – but it was still not enough to meet demand
English farmland values climb 14% in 2011
Farmland Market 2Q2011 Flyer:Layout 1 29/09/2011 15:26 Page 3
Low supply continues to drive up prices
Although the amount of land for sale remains at historically low levels, there were more equipped farms for sale in 2011 than in 2010 and 2009, and more units for sale in the final quarter of 2011 as well.
2011 was the first time more than 100,000 acres of equipped land was for sale since 2008.
There were the fewest bare land sales in 4Q2011 for four years but, for the year as a whole, a similar amount of land was marketed in 2011 as in 2010 and more than in 2009 and 2008.
Land for sale in England (acres)
But despite this increase in supply, the lack of availability can be seen when the figures for specific farm types in specific areas are looked at:
The market fundamentals that are driving prices up have not changed – the amount of land to buy is still very small and demand from farmers, in most places, remains strong.
Land for sale in England
(ac)
4Q2011
3Q2011
2011Whole
4Q2010(% change in
last 12 months)
2010Whole
Bare land 2,800 8,700 23,400 2,200(+28%)
23,100
Equipped farms
10,400 33,000 104,000 7,700(+35%)
98,700
All land 13,200 41,700 127,300 9,900(+33%)
121,800
Land for sale in England in 2011Number of
farms for sale
Number of farms for saleover 250 acres
Dairy farms in North West and North East England
7 1
Arable farms in the South East 19 5
Livestock farms in the West Midlands
22 1
All types of farm over 1,000 acres
14 n/a
North West – Simon WallerThere is limited availability of good quality land for sale. Good stock prices are helping to maintain grassland values whilst large blocks of arable land are still proving an attractive proposition despite the drop in cereal prices. The market for equine units has slowed but this may be a reflection of the time of year. We have sold significant blocks of land to sitting agricultural tenants over the last quarter, and forestry and land to extend gardens is in strong demand.
2011 2010 2009 Bare arable (£/ac) £6,000 £6,000 £5,500 Bare pasture (£/ac) £5,500 £5,500 £5,000 Equipped (£/ac) £6,500 £6,000 £6,000 No. of farms for sale 12 8 9 Total area for sale (ac) 1,500 800 1,100
South West – Simon DerbyThe 4th quarter has been quieter in the South West although it continues to be the most active region for land sales. Demand continues to be strong from farmers for better arable land and there is still good non-farmer demand from people moving into the region. Good livestock farms - in the right place and with the right equipment - continue to sell well. An interesting opportunity for investors is 397 acres of strategic land on the edge of Plymouth.
2011 2010 2009 Bare arable (£/ac) £7,500 £5,300 £5,100 Bare pasture (£/ac) £5,600 £5,400 £4,900 Equipped (£/ac) £9,600 £6,300 £5,800 No. of farms for sale 16 22 17 Total area for sale (ac) 3,800 2,700 2,500
West Midlands – Ed de LislePrices have remained unchanged since the last quarter. There is still demand for land but buyers are definitely more selective and want to ensure that all of their requirements from the property are being met. Two current sales are noteworthy: Middle Hill Farm, an equestrian farm in Gloucestershire, has generated a lot of interest from a broad range of purchasers looking for alternative investments or a residential farm with equestrian opportunities. In Wiltshire, Cowick Farm is a working farm which is attracting interest from investors wanting to get into farming.
2011 2010 2009 Bare arable (£/ac) £7,000 £6,500 £5,750 Bare pasture (£/ac) £5,100 £5,000 £4,750 Equipped (£/ac) £9,100 £9,000 £7,000 No. of farms for sale 6 2 9 Total area for sale (ac) 1,100 200 1,600
Yorkshire and Humber – Sam TydemanThere is still demand for good blocks of arable land but we are seeing a reduction in demand for smaller amenity or lifestyle parcels of land in some areas. We have recently concluded the sale of a 200 acre block of grade 3 land near York which saw strong demand from farming buyers; an offer has been accepted significantly over the guide price of £950,000. A 116 acre block of land in North Lincolnshire has attracted significant interest. In this more difficult market, more effort is needed to attract offers and even well established farming businesses are finding that banks are tightening their lending criteria.
2011 2010 2009 Bare arable (£/ac) £7,000 £6,000 £5,500 Bare pasture (£/ac) £4,750 £4,000 £4,000 Equipped (£/ac) £8,000 £7,500 £7,500 No. of farms for sale 11 5 8 Total area for sale (ac) 1,800 600 2,400
Farmland Market 2Q2011 Flyer:Layout 1 29/09/2011 15:26 Page 3
Equipped farm values continue to grow faster than bare land
Equipped land values rose by 2% in the final quarter and by 13% over 2011 as a whole. This impressive rise in values followed a 16% rise in 2010, so values have risen by a third since the recent low point in the summer of 2009.
Bare land values have also risen, by 3% in the final quarter and by 12% in 2011 as a whole. Although bare land values rose slightly more slowly than equipped ones, their greater resilience in 2008 and 2009 means that bare values have risen by 50% since the start of 2008, making it one of the best performing assets during the recession.
There is growing evidence of a two-tier market – quality land in desirable farming locations continues to sell well but poorer land in less desirable locations is finding fewer buyers so lotting and the quality of marketing is becoming more important.
30 Smiths Gore offices across the UK
NB The regional bare and equipped values quoted are based on the opinions of our farm
agents; the data for number of sales and acreage for sale are based on our database of all publicly marketed farmland over 50 acres.
All data is for 4Q.
Average price in England
(£/ac)
4Q2011
(% change since
3Q2011)
3Q2011
2011Whole
(% change in year)
4Q2010
(% change inlast 12 months)
2010Whole
(% change in year)
Bare land £6,000(+3%)
£5,800 12% £5,400(+12%)
12%
Equipped farms
£9,400(+2%)
£9,200 13% £8,300(+13%)
16%
All land £8,700(+3%)
£8,400 14% £7,600(+14%)
13%
East Midlands – Luke HumphriesWith such a limited market in the final quarter it is hard to demonstrate any significant changes in the land market but we don’t feel that prices have changed. Demand appears to remain strong but is more selective so poorer land or land which has any complications is becoming harder to sell.
2011 2010 2009 Bare arable (£/ac) £7,300 £7,000 £5,750 Bare pasture (£/ac) £5,000 £5,900 £4,750 Equipped (£/ac) £9,500 £9,000 £7,000 No. of farms for sale 8 11 6 Total area for sale (ac) 1,900 2,000 700
East of England – Bennett SwayneThe rate of price increases has slowed down. Buyers are still looking to invest but are not always satisfied by the supply of land and farms on the market, which is thin. There are some very strong prices being paid where there is competition amongst neighbours or the quality is exceptionally good but some blocks are sticking. Big blocks of land continue to sell well, however smaller and marginal areas of land are becoming a more specialist market with a smaller range of buyers. The on-going drought conditions in the region could lower demand for irrigated land and affect prices.
2011 2010 2009 Bare arable (£/ac) £7,000 £6,000 £5,000 Bare pasture (£/ac) £4,250 £3,000 £3,000 Equipped (£/ac) £7,700 £7,000 £7,000 No. of farms for sale 5 7 7 Total area for sale (ac) 900 1,100 700
North East – Iain WelshThere is still a shortage of supply with some large differences in values across the region so in-depth local knowledge is essential. There is clear evidence of a two tier market: quality land in desirable farming locations is selling well and under competition; poorer land in less desirable locations is price sensitive and is taking much longer to sell. We recently had a very successful auction selling 20 acres of arable land between Darlington and Barnard Castle. One lot doubled its guide price and sold for £12,725 per acre. We have got 130 acres of productive arable and grassland available in County Durham with other sales in the pipeline, including a 214 acre farm and equestrian unit near Durham City.
2011 2010 2009 Bare arable (£/ac) £5,800 £5,800 £4,500 Bare pasture (£/ac) £4,000 £4,000 £3,700 Equipped (£/ac) £7,500 £7,500 £7,250 No. of farms for sale 0 2 3 Total area for sale (ac) 0 800 300
South East – David SlackLand values have reached a plateau and buyers have become more selective. We are finding that land has to be correctly priced and look ‘neat and tidy’ to get the interest. There is still very little land or farms on the market.
2011 2010 2009 Bare arable (£/ac) £5,750 £5,200 £5,000 Bare pasture (£/ac) £5,500 £5,000 £4,800 Equipped (£/ac) £7,500 £7,000 £7,000 No. of farms for sale 11 13 10 Total area for sale (ac) 2,100 1,700 1,700
SummaryWe think that the outlook for 2012 is positive. Despite the market becoming more discerning, the price of the best quality land should be supported by rising commodity markets and a continuing positive outlook for UK agriculture.
It is too early to say what the effect of the CAP Reform will be however it is more likely to be negative if the proposals for capping payments, only making payments to active farmers and greening, remain unchanged. Our analysis of land markets during previous reforms found that the effect of the reform on prices is variable – it can be positive or negative – but that the amount of land for sale before a reform always drops. Therefore we expect less land to be marketed in 2012; the only factor that might increase supply is if landowners think that the market has peaked and want to cash in but previous reforms suggest this will not happen.
We do not expect the reforms to the planning system to have a significant effect on values or the amount for sale, and certainly not until the market for residential property gets better. The Eurozone crisis is likely to mean more investors want to move into a stronger currency so there should be greater demand for bigger units from investors – if they can find any!
We therefore expect prices to continue to rise and our model of the English farmland market forecasts a 7% increase for 2012.
ContactsOur farm agents would be pleased to give you more information about the land market in your region or county. Please do not hesitate to contact them:
If you have any questions about the review, please contact Dr Jason Beedell, Head of Research, on 01733 866562 or [email protected]
National Head of Farm Agency ➲ Giles Wordsworth Oxford 01865 733302
Southern England - Head of Farm Agency ➲ Giles Wordsworth Oxford 01865 733302
South East ➲ David Slack Maidstone 01732 879053 Giles Wordsworth Oxford 01865 733302 Harry St John Oxford 01865 733304
South West ➲ Simon Derby Taunton 01823 445036 Giles Wordsworth Oxford 01865 733302 Harry St John Oxford 01865 733304 Toby Perry Exeter 01392 294891
Northern England - Head of Farm Agency ➲ Sam Tydeman York 01904 756303
North East ➲ Iain Welsh Darlington 01325 370500
North West ➲ Simon Waller Preston 01772 663124
Yorkshire and Humber ➲ Sam Tydeman York 01904 756303
West Midlands ➲ Ed de Lisle Lichfield 01543 261987
East Midlands ➲ Luke Humphries Peterborough 01733 559322 Robert Bennett Lincoln 01522 539555
East of England ➲ Bennett Swayne Newmarket 01638 676748
Wales ➲ Charles Orr-Ewing Sennybridge 01874 636868
Scotland - Head of Farm Agency ➲ John Coleman Edinburgh 0131 5617103
Scotland - Southern ➲ John Coleman Edinburgh 0131 5617103 Kay Paton Dumfries 01387 274394
Scotland - Northern ➲ Jamie Watson Fochabers 01343 823005
