The view from the South East
Savills farm agency team in the South East reflects on the market in 2017 and looks ahead to what next year might hold.
This year our team has marketed a wide range of properties in all sectors of the market from large commercial holdings and residential farms to blocks of bare land and smallholdings. There is most definitely a market to be had as demonstrated by the sales we have concluded so far.
Notable sales across the region this year include 75 acres at Sewells Farm in East Sussex, 96 acres at Yaldham Manor, Kent, and Owletts Barn, 66 acres of land with a recently constructed barn and farm office in West Sussex. We have also agreed the sale of 342 acres of productive arable land on Romney Marsh, which is currently under offer. The buyers in these examples are predominantly farmers and investors.
Interest in residential farms has improved during the past few years and the sale of Great Thorndean Farm, West Sussex, is a good example. It attracted not only purchasers from the region but also from London and further afield. The farm was sold in four lots for above the £2.3m guide price.
Supply The supply of land openly marketed this year across the region is down by 34% to the end of September, compared to the same time last year. Undoubtedly the current political and economic uncertainty tied up with the Brexit negotiations have encouraged some potential vendors to adopt a ‘wait and see’ approach.
Overall there are fewer buyers in the market. However, we have seen an increase in buyers with funds from company sales or development gains and a renewed appetite from overseas investors with the devaluation of the pound creating value. Local and regional buyers remain active although their interest is very area specific.
Behind the scenes the private market continues to be active currently accounting for about 30% of our business. Throughout the course of 2017 we have acted for numerous private and institutional clients in a purchasing and selling capacity. Through our network of contacts and local market knowledge it has been possible to create a number of opportunities which would not have arisen in the open market.
Prices This year average values have remained at a similar level to 2016, but the range in values achieved across the region is extremely wide with sales achieved at £6,500 and up to £14,000 per acre, dependent on quality and location. Well equipped units and residential farms have sold within a tighter price range and more consistently, but the variations in price for bare blocks of land are significant and in some cases blocks remain unsold.
Marketing at the right guide price is absolutely key and will remain so as we head into 2018.
In the short term we believe UK farmland transactions will remain subdued as some existing and would-be commercial operators delay entering the market until more is known on farming’s potential future prosperity. Supply volumes are unlikely to reach let alone exceed the long-run average and the range of values will continue to be diverse depending upon location and quality. Any declines in average values are not anticipated to go beyond a -5% annual dip.
We expect a stronger market in the first half of next year than the latter, with the amount of land transacted off market continuing to be strong. The outlook is optimistic, but cautiously so.