After weather woes around the UK stalling markets early in the year, Alex Black speaks to land agents about what is performing well in the farmland market.
Weather conditions at the start of the year stalled activity in the farmland market but an ‘encouraging’ amount of land is expected to come to market during spring.
The dairy sector is attracting increased interest with strong selling values and good rental potential, according to Carter Jonas.
Buyers continue to be ‘discerning’ and are happy to wait for the ‘perfect farm’ as the market and economy are changing, rather than rush into a purchase.
In Scotland, relocation and retirement continued to dominate the market with some English buyers looking to relocate north of the border after selling land for development.
And the Northern Irish market is looking for scale and quality, with smaller units often struggling to sell.
Experts from land agents Carter Jonas give their insight into the English and Welsh markets.
LACK of supply of commercial farmland is characterising the market in North and Mid Wales during the first quarter of 2018, according to Bangor-based rural associate Hugh O’Donnell.
“Uncertainty over Brexit, and in particular the future of subsidies, is no doubt playing its part in making farming businesses take a more cautious approach to selling farmland,” he says.
“That said, the lack of supply has meant demand remains at an encouraging level with evidence of good values being achieved in some strong localised markets.”
In the West of Wales, the supply of farmland is also down on the year to date compared to 2017 however there is a number of farms larger than 80 hectares (200 acres) to come to the market over the coming weeks.
LAND values are becoming increasingly polarised in the Midlands, in line with the disparity between farming and non-farming income.
Rural associate Ben Ainscough says: “A general lack of supply, and the continued appetite for landowners to invest back into agricultural land from development success has seen land sales in the West Midlands remain strong.
“Further east, the market is more limited, as buyers have generally become more discerning and farming businesses remain cautious in the build up to Brexit.”
SPRING sales in the South are being delayed following unseasonal weather, according to rural partner Andrew Chantler.
Acreage coming to the market is expected to be up on last year but supply is struggling to keep up with demand in certain areas and will hold prices static, albeit back from their peak.
He says: “The area between the M40 and the M3 has long been a corridor of wealth, but the dynamics of this wealth and buyer profile is changing over time, with international and rollover buyers now prevalent alongside existing estates and farming enterprises.”
He says an appetite remains for good quality assets but the market is becoming more polarised.
PRICES in the central region appear to be holding firm with strong demand in popular areas, but location remains key, according to rural partner Ed Smith.
Going forward, the supply pipeline is key to prices and he expects values to remain similar to last year.
Prime arable land is attracting attention, particularly from rollover buyers, with lifestyle buyers interested in 40-hectare (100-acre) smallholdings.
THERE is continued caution in the North West market with a very low supply of good quality land and farms for sale.
Landowners are reluctant to sell, even those looking to retire and downsize, says Robert Bowyer, rural surveyor in Kendal.
“Hot spots continue to buck the trend and there are areas throughout the North West where the market is buoyant and as a result supply remains strong.”
North East, Yorkshire and Humberside
A CHALLENGING early spring and uncertainty from Brexit is contributing to a slow start in the North East.
The ‘best in class’ properties and those which have potential for development, diversification or sporting rights, continue to attract competitive bids, according to rural associate Sam Johnson.
“If there are no rollover or non-agricultural buyers in an area, and the lot size is too large for neighbours to swallow up, this can limit values, and an appreciation of the local market is key,” he says.
There continues to be a polarisation in values, but the market in the North East remains sophisticated and pretty resilient.
SUPPLY of land in the East is continuing to show steady growth.
Rural surveyor Jack Cook says landowners with properties offering more than commercial farming opportunities are selling on the open market, to seek out lifestyle buyers.
“Many of the farms coming to the market have a residential element, so the need for open marketing is paramount in order to correctly assess the market value,” he says.
“While off-market deals remain a strong option for vendors to initially test the local market, they are better suited for bare arable land assets.”
“In terms of demand, the scale and profile of buyers in the East continue to show diversity, but centre around farmers, lifestyle buyers and buyers with rollover funds.”
And with residential farms selling strongly, this part of the market may be key in driving average values over the next two years.
FOLLOWING a slow start to 2018 due to the long winter, spring is bringing a busy season to the South West region.
Jack Mitchell, Rural Associate, says the market continues to be polarised, especially for bare land, and driven by location.
He says: “There is currently a shortage of well-located, residential, lifestyle farms, and there is a strong demand for the right property in the right place, priced between £1 million to 2m,” he adds.
Over the next year he is expecting to see increasing divergence with the uncertainty around payments and cashflow meaning buyers’ attitudes have a bigger impact.
“While some landowners are eager to expand their businesses by absorbing neighbouring farms as they become available, others remain cautious.”