An acre of farmland in England is now worth £8,059, according to the latest Farmland Index report from Knight Frank. This marks the first time that the average price of an acre of bare agricultural land has broken the £8,000 barrier.
Despite the upcoming general election creating a sense of uncertainty throughout the UK housing market, investment levels in farmland across England have continued apace, with prices continuing to rise during the first quarter of 2015. The average price of farmland per acre rose by two percent between January and March this year, while farmland values have risen by 10 percent over the past 12 months and by a staggering 192 percent over the past 10 years. Given that even prime property in central London, the UKs best performing real estate market, rose by ‘only’ 138 percent in terms of capital growth in the last decade, it is easy to see why farmland is an attractive area of commercial property investment.
According to Andrew Shirley, head of rural research at Knight Frank, the farmland market can be separated into two distinct sub-markets. First and foremost, large blocks of arable land, generally spread out over 1,000 acres or more, which are highly sought after by investors. The high demand for such land can often result in price tags of up to £12,000 an acre. The second sub-market is that of smaller plots of land that are typically sought after by farmer buyers rather than investors. Shirley cites interest in owning a piece of commercial property with long-term potential for strong capital growth as being the main attraction for investors.
He also points out that although East Anglia has long been the traditional location for investing in farmland, buyers are now also looking further afield, with strong sales results being reported in counties like Hampshire.
Furthermore, farmland prices are expected to see a continuous rise over the next 12 months, with an average of a six percent increase predicted.