Agricultural Market Commentary
The Farmland Market- January 2019
The 2018 “on-market” sales, in terms of both total acreage sold and number of transactions, the year has been not dissimilar to 2017; although as usual there have been a number of “off-market” deals that inevitably obscure the true picture. Our feeling, however, is that the number of off-market transactions have fallen as compared to recent years.
In terms of demand, buyer appetite for larger acreages and relatively better quality land has been very marked this year, with smaller parcels of land, with less inherent fertility or in less favoured locations sometimes struggling to find buyers.
Demand has continued to come from the usual suspects, most notably from long-term investors, with or without “roll-over” funds, from an increasing number of farmers with roll-over funds and from farmers attempting to fund purchase from their own core businesses; the latter typically putting a floor in the market if for whatever reason there are no investors, with or without roll-over funds, in the bidding.
In terms of pricing, publicly available evidence to date, together with transactions with which we have been involved this year acting both for buyers and sellers, lead us to conclude that the perceived slight price falls in 2016 have been reversed and there may even have been a slight rise on the levels reached in 2014/15. Prices have ranged from lows of £6,000 to highs well in excess of £12,000 per acre for arable land; with a “good average” now safely back around £10,000 per acre. In terms of grassland, often being land that cannot be brought into arable cultivation for reasons of aspect, slope, flooding or being historically permanent pasture, the range is similarly wide; with a “good average” now selling at between £7,000 and £8,000 per acre.
In conclusion, therefore, a slightly better market sentiment than this time last year, despite – or perhaps because of – continuing BREXIT uncertainties. Again, despite the increased chance of political change in the UK, coupled with distinct prospects for a less benign Capital Taxation environment for agricultural land ownership, and as yet no sign of a return to late 20th Century levels of interest rates or inflation, the outlook for farmland in 2019 appears to be “steady as she goes”.