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Farm buyers look to longer term - with market likely to become more polarised

The farmland market has been quiet during the early months of 2019.


Alex   Black

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Alex   Black
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Farm buyers look to the longer term

Changes in agricultural subsidies were making buyers and sellers in the farmland market consider the longer term, with the market likely to become even more polarised.

 

Inactivity has been the defining theme in early 2019, with the political landscape leading to a lack of supply and buyers ’sitting on their hands’.

 

Andrew Chandler, partner at Carter Jonas, said: “Brexit is the elephant in the room driving the inactivity.”

 

He expected the markets would become even more polarised across the regions and he expected values would ’slide slightly’ across some areas.


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“We have already seen them contract since 2015,” he added.

 

However, Mr Chandler added farmland was still seen as a reasonably secure asset in times of uncertainty, pointing to the last recession when supply dropped but there was demand to invest in land.

 

Location

 

Location was vital and people were also looking for more options on diversification, with demand for bare land dependent on whether there were rollover buyers in the area.

 

Mr Chandler added the South East would be sheltered due to the demand for housing in the region.

 

Michael Fiddes, head of estates and farm agency for Strutt and Parker, said the first two months of the year had been quiet.

 

“It is a product of what is going on politically, like you have seen every time there has been a change in CAP,” he said.

 

“I think, therefore, you will see a market which wakes up later this year.”

 

He said farmers were being understandably cautious, and highlighted farmer buyers falling under 50 per cent of the amount of purchases last year.

 

But there was a lot of money which wanted to be invested in land, but location was key to the value.

 

Diversification

 

Rural agency Fisher German expected values to soften for poorer livestock holdings and in less favourable locations, but well-located, diversified and productive holdings would hold their value.

 

The phasing out of direct payments will see landowners considering the medium to longer term and deciding whether to invest in new technology, diversify or retire from farming.

 

Farms with diversified income streams or opportunities would therefore be in higher demand and more medium-sized farms could come on to the market if farmers decided to exit the industry.

 

Richard Gadd, Fisher German, said: “As soil health, productivity, environmental enhancement and greater animal welfare take priority under new farming policy, we expect buyers to demand more in-depth evidence of farming practices when looking to acquire new holdings in 2019.”

 

He did not expect big changes in the current profile of those buying and selling, with farmers and institutional investors representing the majority of vendors.

 

Lifestyle buyers would also continue to play a role in the market, with Mr Gadd expecting increased demand in this sector.

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