Farmers are facing unprecedented competition when attempting to buy top quality agricultural land.
New figures announced this week showed average UK farmland surpassed £24,700/hectare (£10,000/acre) in the second half of 2014, hitting record highs for the 11th consecutive period.
But at Strutt and Parker’s annual Rural Land Briefing on Wednesday, delegates heard the headline figures masked a hugely polarised market, with concern also being expressed about the potential negative impact of a depressed dairy market on pasture land.
Experts claimed most land was seeing little increase in price, while a small proportion of top quality arable land was seeing fierce competition, with an increased interest from private and foreign investment.
Mark McAndrew, partner at Strutt and Parker, said: “Farmers are the bulk of the market but the top end is driven by investors and they will continue to invest. They are small in number but are determined and know they have to get land when it becomes available.”
With arable commodities facing a continued downturn in recent months, it was suggested farmers may be priced out of deals for those top bracket parcels of land.
Mr McAndrew disagreed, claiming the influence of investors was not driving farmers out of such deals but suggested their presence in the market could inflate values.
He said: “This land could be worth £7,000/acre if you did not have these players, but [with private investment competition] it could be worth £12,000-£13,000/acre.”
The jointly published RICS and Royal Agricultural University Rural Land Survey for the second half of 2014 showed an 8.3 per cent increase in land prices over the year to an average of £24,900/ha (£10,067/acre). And prices were expected to continue their rise in the coming year.
Josh Miller, RICS senior economist, said: “Although there remain a number of risks on the horizon, including commodity price volatility, the forthcoming General Election and a possible exit from the EU, surveyors remain confident, on the whole, prices will continue to rise over the next 12 months.”
Mr Miller also noted the influence of lifestyle farmers in the market.
Jessica Simpson, country buying agent at Strutt and Parker, underlined the effects of investors in the farmland market, but questioned their role going forward.
“While the UK has been suffering from recession, land has been low risk. Will other investments become more appealing as the economy recovers?” she asked.
Mr McAndrew added there were opportunities for farmers looking to buy smaller pockets of top quality land. He also expressed concerns to Farmers Guardian about the prospects for pasture land in certain areas due to the issues in the dairy market.