Farmland values across the UK recorded a slight decrease in the first quarter (Q1) of 2017 according to Carter Jonas, the national property consultancy. Average arable land values remained below £10,000 per acre in most areas, with the exception of Central and Southern England, which out-performed the rest of the country.
Q1 sales activity was relatively quiet throughout the UK, reflecting the seasonal nature of the sector, as well as the impact of economic and political uncertainties on the market. Hotspots in each region are evident, and some markets are exceptionally localised resulting in some assets generating a great deal more interest than similar holdings in the vicinity.
Sales levels in the South of England, unlike the rest of the country, remained robust, and Carter Jonas expects activity across the UK to increase, with a strong pipeline of stock coming to market over the second quarter.
Recording the highest average rents for Farm Business Tenancies, at £170 per acre, holdings in the East of England are of most value, particularly when a commercial element is incorporated, with bare land generating limited interest.
The rural sector as a whole still holds strong appeal for international investors, with European buyers in particular looking to capitalise on the weaker Sterling. Rollover relief funds continue to play an active role in the market, while lifestyle buyers have dominated the North West and South West regions.
Commodity prices continue to be driven by fluctuations in the currency market, with output prices recording an average annual growth of over 25%. Milk, in particular, saw the greatest increase, with prices rising by 7.5% over the last quarter. Having fallen throughout 2016, the price of fertiliser (ammonium nitrate), rebounded back to its mid-2015 peak, reaching £241.5/tonne, up 38% on the last quarter.
Tim Jones, Head of Rural, Carter Jonas, comments;
“Following a traditionally quiet first quarter, diversification remains key to the rural market. Amidst great uncertainty, which has been exacerbated by the impending General Election, it is vital that the sector remains innovative and resilient, in order to play its crucial role in the UK’s economy.”
Andrew Fallows, Head of Rural Agency, Carter Jonas, comments;
“Now that Article 50 has been triggered, it is understandable that landowners are adopting a ‘wait and see’ approach to business. However, with farm incomes steadily strengthening over the last eighteen months, we are confident that rural holdings still represent a solid investment. We expect to see an increase in sales activity as we move into the second quarter.”