There is an estimated £7.5bn of funds currently available to purchase farms and estates according to analysis of Savills‘ applicant register. However, for these funds to be exhausted, more than 1 million acres of farmland with an average value of £7,500 per acre would have to change hands. This equates to the total acreage publicly marketed for the past six years.

Crispin Holborow head of Savills country department explains the demand: ‘Farmland is seen as a safe haven in times of trouble, which has held true this year. There are still useful tax benefits both in trading and owning land quite apart from the potential windfalls from development in the future. Land also has obvious lifestyle attractions and an improvement in the amenity and country house markets in the second half of the year have reinforced the rises in farmland values recorded since June.’

Savills forecasts that average farmland values will continue to rise in the short and medium term by about 6% per annum. This forecast is based on the agency’s newly launched farmland model for Great Britain. The weighted model, which takes into account the key variables that affect price such as farm incomes, wheat price and yield, subsidies, prime country house values, is adjusted for any ‘lag’ effect.

Ian Bailey head of rural research says: ‘Our model predicts that average grade 3 arable land values in England could reach £7000 per acre and more than £5000 per acre in Scotland. However, the current ranges in values achieved are wide and applying our forecasts to the higher figures achieved could see the best land reaching £10,000 per acre well before 2015.’

Meanwhile, Smiths Gore’s results report that the picture across the country is of very limited amounts of land for sale and  pent up demand from farmer, non-farmer and investment buyers. ‘Some of the increase in values is due to smaller farms being marketed.  Our database of sales clearly shows that smaller farms have higher values per acre, as the value of the house and buildings ‘boosts’ the value per acre.  Given this, careful lotting of farms is essential to maximise their overall value,’ comments Giles Wordsworth, Head of Farm Agency.

As for values, their research reveals that the value of equipped farms (those which come with a house or buildings or both) rose for the first time since summer 2008, increasing by 2% in the final quarter of 2009 to an average across England of £7,200 per acre.  However, values are still about 10% lower than a year ago,’ says Dr Jason Beedell, head of research.

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