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The average value of farm land in England increased by 2% in the third quarter of 2014 and has increased 12% so far in 2014, the latest index shows. The average value of commercial farm land without any land or buildings now stands at an average of £7,689 per acre, or exactly £19,000 per hectare, the results from the Knight Frank farm land index show. Year on year, farm land prices are up 15% and over a 10 year period, farm land has risen in value by 187%, second only to gold at 224%. The 2% growth in the third quarter of the year builds on the 9% growth seen during the first half of 2014. This comes at a time when there is limited supply. The amount of publicly advertised land is down 15% compared with 2013, according to the Farmers Weekly Land Tracker and the ongoing demand from both farmers and investors continues to push up prices. Despite recent falls in the price of agricultural commodities such as wheat and milk, farmers are still focused on the long term and are keen to acquire neighbouring or nearby land when it becomes available. With house builders increasing their output and acquiring more development sites, the number of farmers with roll-over funds to spend on land is growing. As farmland is acquired for the controversial HS2 rail scheme this could also bring new buyers into the market, says the Knight Frank report. Investors’ hunger for land remains undimmed, as highlighted by the recent purchase of the Co-op farms portfolio for almost £250 million by the Wellcome Trust. Part of the problem for investors, particularly funds, is the lack of suitable investment grade land available, combined with strong competition from neighbouring landowners prepared to pay a ‘legacy’ premium for land that they may only have one opportunity to buy and once purchased may stay in their families for generations to come. Because of this, many investment led deals are happening off market. Knight Frank’s Agricultural Investments team, which is acting for a number of wealthy individuals and funds, estimates private deals are outnumbering public ones by as much as two to one. Although large tracts of arable land with relatively little value tied up in high value period farm houses are selling quickly and the market for estates with large residential properties is less fluid, according to Clive Hopkins, head of the firm’s Farms and Estates team. ‘In some instances, this has led to large chunks of an estate’s farm land being sold off separately for a premium price. I think this trend really highlights the strength of the farmland market. Traditionally it has been the house leading the sale, now often it is the land,’ he added. Continue reading →
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