Farmland has outperformed most alternative assets over the past three years recording annual returns of more than 20% says a new report from Savills research. Interest from investors last year helped to push up average arable land values by 15.5% and average pasture values up to 28.4%, says the research.

Ian Bailey from Savills research said: ‘The period of exceptional growth in values appears to have stalled for the time being but historically farmland has remained fairly resilient to recession with any fall in values limited.’

Average values are expected to stabilise this year, dipping in the first half and regaining lost ground in the second half. Also, a more distinct two-tier market is expected with good quality, well-equipped well located and commercially viable farms commanding higher prices.

Overseas will also continue to be a significant and important source of demand, particularly due to the weak performance of sterling, according to the report.

Christopher Miles from Savills Norwich commented: ‘In the East we have kicked off the New Year with renewed interest in farms from UK and overseas investors but with very little land available compared to this time last year demand is building. I remain positive for the outlook for prices if good arable and with the prospect of a late market it may be a case of the early bird catching the worm.’

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