Just over 180,000 acres of farmland were publicly marketed across GB during the year. This acreage, despite the uncertainty prior to the EU Referendum, was very similar to the area advertised in 2015, although market activity was mainly concentrated in the second half of the year – notably in September.
The overall picture, according to the Savills Farmland Value Survey, was of a marginal drop in value year on year (just over 3% in England and GB as a whole), but the results of the sales of a handful of estates each over 1,000 acres, launched in August onwards was very positive – with competitive bidding and guide prices well exceeded.
The supply and demand profile in 2016 changed very little on previous years although there were a few exceptions including:
- the proportion of farmers selling in 2016 was lower than in 2015; with a number of potential factors contributing including a softening in farmland values in the short term, uncertainty surrounding Brexit and the short term prospect of an increase in subsidy as a result of the weak pound.
- a higher proportion of ‘new’ non-farmer (lifestyle) buyers – those who were purchasing farmland for the first time, although existing lifestyle landowners appeared to have been less competitive in 2016.
- an increased use of borrowed money for farm purchases, 30% of all buyers compared with 23% in 2015, suggesting that buyers may be taking the opportunity to use ‘cheap’ money while base rates are at a historical low.
Our 2017 Agricultural Land Market Survey includes some new research – we have valued farmland Britain. The combined value of GB's 39.8 million acres is £185.7 billion – equivalent to 3% of the total value of GB’s housing stock, which is worth £6.69 trillion.
As an investment the current pressure on average farmland values should be set in context against long term performance. The total value of GB farmland and woodland has increased 149% over the past 10 years.
Looking ahead, we anticipate a continuation of the wide variance in results for the best and poorest, with a flight to quality. Barring any major economic or fiscal changes, we do not anticipate significant price rises or falls in the coming years (5.5% overall growth for the next five years) and a return to sustained, steady growth in the longer term.
In addition to assets in GB, it is increasingly realistic to hold a diverse portfolio within the global agricultural sector, offering farmland investors the opportunity to spread risk and maximise returns – we look at some opportunities on The Global Market.
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