Aspects of Land | Spring/Summer 2018

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29 Spring / Summer 2018 Aspects of Land
L and markets were
quieter in 2017
than they have
been for the last
couple of years
and fell below the
10-year average both in the
number of acres and number
of farms coming to market.
The fall is being attributed to
caution among sellers linked
to the uncertainty of Brexit.
“It’s a similar pattern to
what we saw after the global
financial crisis of 2007-08,”
says Alex Lawson of Savills
National Farms and Estates.
“Both events prompted an
initial increase in activity as
certain sellers decided to
leave the asset class pretty
swiftly, followed by a lull in
new launches, which for
the financial crisis lasted
until 2015.”
Most of the sales in 2017
came about due to retirement
or death or other personal
circumstances. However, there
has been a rise in the amount
of farmland coming to the
market because of debt, which
now accounts for more than
one in five sales.
“The proportion of debt-
related sales could rise even
higher in the short to medium
term as the potential effects
of Brexit on both trade and
farm support are felt,”
warns Alex.
The profile of buyers, on
the other hand, has remained
largely unchanged over the
past three years. Almost
half of transactions involve
a buyer wanting to expand
an existing farm. Farmers
are behind around 40% of
purchases and there has
been a rise in interest from
institutions.
Meanwhile, the average
capital value of arable land
has been under pressure
ever since the downturn in
commodity prices in 2014.
However, there are signs
of hope in Savills quarterly
Farmland Value Survey that
suggest that the rate of any
decline is now slowing.
Prices for some types of
land have shown greater
resilience than others, linked
in no small part to how
they might fare if subsidy
and trade rules alter post-
Brexit. For example, poorer
quality arable land, which is
heavily dependent on subsidy
for its productive value at
the moment, recorded the
largest drop in value of 2.8%
in 2017. Prime arable land
dropped 2.5%, but was still
commanding close to £9,000
per acre, while the land type
showing the greatest resilience
is lower quality grazing land.
“Prices in this sector only fell
1%,” explains Alex. “This is
because demand has remained
strong for lifestyle holdings
with a higher amenity value.”
It is the amenity value of
property that is going to be the
driving force for higher land
prices over the next five years,
according to Savills forecasts.
“For purely commercial
farmland, much will depend
on the outcome of trade
negotiations and subsidy
changes, but there is likely to
be some pressure on average
values for these holdings
over the next five years,”
says Alex.
“However, for the best
properties with lifestyle
benefits or diversification
opportunities, we are going to
be seeing positive growth of
around 2% a year.”
This is below the growth
figures of the last decade or so,
but set in a historical context,
over the last 100 years, the
value of farmland in the UK
has risen at an average of
6% a year.
n To read more about UK land
prices and predictions, visit
Land prices in
uncertain times ~
There’s no doubt
that Brexit is
affecting market
sentiment, but there
is a wide range of
prices achieved
with average values
steadying over the
next five years
Values for prime arable land are suffering in the Brexit uncertainty
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