Farmland values rose by 3% in the first three months of this year according to Knight Frank and are now 11% higher than 12 months ago putting average property prices at almost £6,000 per acre.
Tom Raynham, of Knight Frank’s farm sales team, comments: ‘This resilience is part of what makes farmland so attractive as an investment and should help ensure values continue to rise steadily during 2011.
‘When you look at the performance of other investments, such as the FTSE 100, the farmland market has been far less volatile and survived the credit crunch in much better shape. That hasn’t been lost on private investors and we have noticed a lot more interest in good quality arable land and farms, especially now that commodity prices have also started to increase.
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‘Wealthy individuals have always enjoyed owning land because of its amenity value, tax-planning benefits and as a long-term hedge against inflation, but now they are also starting to look more carefully at its potential to generate an annual return as well.’
Savills has also found values of land outstripping many other asset classes and where competition was strongest research found that values achieved highs of £8,500 per acre for prime arable land in the region.
Alex Lawson Director of Savills said: ‘Across England, arable land values continue to record the strongest levels of growth. The thirst for productive, well located farmland has led to record prices; several sales of substantial blocks have achieved over £10,000 per acre and prime arable land is regularly achieving over £8,000 per acre.’