Farmland market holding strong in the face of political change

The spring farmland market in England was quieter than normal, which was undoubtedly due to uncertainty in the run-up to the EU referendum. However, activity since the vote suggests that sales for the year have, more or less, caught up in the latter stages of 2016.

“Farmland is still very much a traditional market with the majority of sales in the spring and autumn period. While the referendum probably resulted in some land being held back in the spring, some big estates have come to the market since the vote,” said Chris Spofforth, Savills head of Farm Agency in the South East.

Savills research shows that just over 162,000 acres were publicly marketed across the UK in the first nine months of 2016, which is slightly up on the acreage marketed during the same period of last year. Within that, in England, activity was down by one per cent, tempered by uncertainty.

While there remains some uncertainty around support payments during and post-Brexit, government confirmation that current levels will be guaranteed until 2020 has helped settle the market. Interest in estates launched in the late summer and autumn has reflected this confidence, affirming a healthy appetite for the best properties.

“In a discerning market, still relatively short of supply, pricing remains critical and competition is often the key to achieving the right sale result,” said Chris.

A good example of the key combination of sought-after location and realistic pricing is the recent sale of Abbots Court Farm on Romney Marsh in Kent. Extending to about 1,000 acres of predominantly arable land in four blocks, Abbots Court Farm generated a huge amount of interest from a wide variety of buyers. Investor interest, from home and abroad, was primarily channelled through Savills Head Office Farms and Estates team in London, who were encouraged to find new buyers in the market looking beyond the traditional investment strongholds of East Anglia and the East Midlands. Local interest came through Savills Rural office in West Malling, and was from a mix of existing farmers looking to extend their holdings in an area where land rarely trades on the open market, and potential new entrants to farm ownership.

Richard Mann of Savills Farm Agency team in Kent said: “Offering Abbots Court Farm in four blocks really opened up our marketing and gave local farmers the best opportunity to acquire a decent parcel of farmland without overstretching themselves breaking the bank in uncertain times. It was particularly satisfying to engage with younger buyers having ambition and enough confidence in the future of the farming sector to have a go at this unusual opportunity.”

The lifestyle market in the South East has been more pedestrian this year than it has been previously. “There are fewer buyers, but those in the market do seem to be motivated and, as we head towards 2017, there is slowly but surely an improvement in activity in the lifestyle sector. If that trend continues, the outlook for next year is more positive,” continued Chris Spofforth.

“We also expect to see more activity in the investor market. Though income yields tend to be low from farmland, it is seen as a very secure and tangible asset against other more volatile markets. If it was purely down to the profitability of farming then the uncertainty around Brexit and other variables in agriculture might have a more significant impact. As it is, people also buy for a huge range of other reasons, including capital growth, lifestyle, diversification or conservational interests.

“Looking ahead, agriculture tends to do well in times of economic uncertainty. In addition, the weak pound creates opportunities for overseas buyers and benefits diversified income streams such as tourism. Both of these factors, along with the anticipated reduced supply, will continue to drive the market.”


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