Scottish arable farm prices rise

Last year saw sales of farms and farmland in Scotland achieve an average premium of 13%, which bodes well for the year ahead predict agents at Strutt & Parker.

With over 21,000 acres of farmland sold on the open market in 2013 which, combined, amounted to £95m worth of transactions, demand for quality Scottish arable farmland saw the number of sales breaking the £10,000 per acre continuing to rise during 2013. Demand for grassland farms also remains firm with a small increase in the average price and blocks of bare land selling well to neighbouring farmers who did not require further buildings. The percentage of purchases by established farmers rose from two-thirds in 2012 to three quarters in 2013.

Whilst the number of arable farms offered for sale increased in 2013, the number of dairy farms dropped to only 6% of the total market. The scarcity of this type of farm together with an improved milk price ensured that the price in the sector remained firm.

“The reason that farm prices in Scotland have continued to rise in capital value over the past few years despite a global recession and margins in agriculture generally tightening can simply be attributed to a lack of supply of all farm types” says James Butler of Strutt & Parker. “There are many potential sellers who are holding off going on the market in the belief that there are few better alternatives in which to invest sale proceeds”.

Butler continues, “there is some uncertainty on the horizon in 2014 which is also causing sellers to sit tight, with the Independence Referendum in September and the Scottish Government yet to confirm details of a replacement subsidy system for CAP payments which are being reformed and implemented in 2015. In addition, the weather has a strong influence on when sellers offer their land for sale. Last year’s poor Spring saw low sales compared to the very buoyant summer and autumn when the weather improved considerably. However, we predict that the demand experienced last year is unlikely to diminish – Scottish farmland continues to be comparatively cheap compared to neighbouring countries and there are many frustrated buyers who failed to secure a suitable far, in 2013. We also predict that the gulf between prime arable land and the poorest land will continue to widen over the next few years”.

Strutt & Parker is one of Scotland’s leading land agencies with a specialist and dedicated team which handles the purchase and valuation of farms and farmland throughout the country.

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