The average value of investment farmland rose by 14% over the last 12 months and 228% over the last 10 years, according to Knight Frank’s new Farmland Investment Index.
This was a markedly stronger performance than other major asset classes, including prime residential property in central London (+135%) and the FTSE 100 (+28%).
The new index tracks the value of large blocks of arable farmland across England, typically upwards of 1,000 acres, which because of their scale are of interest to investors.
The relative scarcity of this investment-grade land means its performance has even outstripped the overall farmland market which has risen on average by 10% over the last 12 months and 198% over the last 10 years to hit a record high of £8,265/acre, according to Knight Frank’s Farmland Index.
Demand from farmland investors is strong with values now standing at an average of £12.500/acre. However, over the past three months values have remained unchanged indicating that prices might be starting to level out.
Tom Raynham, Head of Knight Frank’s Agricultural Investment team, comments:
“The demand for agricultural investments has risen beyond the market’s expectations and is attracting private, institutional and corporate investors alike.
“The institutional investor has come back with greater resolve in the last 12 months following the sale of the CO-OP Farms portfolio and now has a greater understanding that although values might fluctuate, the underlying asset is never depleted if managed properly.
More land is coming to the market and greater portfolios are being put together, further developing the farming industry and safeguarding the invaluable investment that is helping to support food production in the UK.”