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Farmland bucks the global slump

SCOTTISH farmland has defied the global economic downturn by growing in value by a recession-busting 9.7% over the last year.

As asset values tumble in other industries, the long term importance of productive land has come to the fore – and the latest figures from land agents Savills suggest that the Scottish market has actually outperformed the rest of Great Britain.

According to the firm, with 36,000 acres advertised publicly, the amount of farmland marketed in Scotland increased this year by 22% in comparison to the first three quarters of 2011. This is the largest supply of farmland on offer during the first nine months of the year since 2006.

However, speaking from Savills Brechin office, Luke French noted that the trend was driven by the disposal of smaller units: "While we have seen a notable increase in supply this year, larger commercially viable farms have been scarce," he said. "In fact, of the 134 farms available this year, only 23 had more than 400 acres."

Analysis of these latest figures reveals that 54% of the farms marketed this year have either sold or are currently under offer, leaving around 62 farms unsold, almost half of which are located in Southwest Scotland, and are typically between 100 and 300 acres.

"Whilst east coast arable land of any size will continue to find buyers comparatively easily, farms on the west will need to be of sufficient scale and well equipped if they are to attract similar levels of interest," he reckoned. "Or if they are of smaller acreage, they need to include top quality land."

The figures also suggest an increase in the supply of tracts of bare land on the market, with sellers apparently capitalising on farmers' appetite to expand their properties in sought after areas like the Lothians, Fife, Central Scotland, Perthshire and Angus.

Average values in Scotland performed most strongly compared to the rest of Great Britain during the last quarter, increasing by 7.3% to £6450 per acre for prime arable land – but prices in excess of £8000 per acre have been achieved where 'competitive situations' have arisen. In comparison, the average across Great Britain saw prime arable land values rise by 3.2% during Q3, to level at just under £7200 per acre.

Looking to Scotland's rural estates, Savills also reported 'bullish' prices. While fewer estates have sold this year, those with competitive closing dates received multiple bids. All told, fourteen estates sold in Scotland in 2012, with a combined value of £37 million, compared to 22 in 2011, with a combined value of £86 million. Savills added that a similar number of estates could be purchased privately.

The firm's Anna Henderson said: "Those sellers who went to the open market this year were well rewarded as there have been some spectacularly strong deals done at closing dates, many to buyers who were not in the market in 2011. Recent buyers have included two Europeans, a Chinese businessman and a returning ex-pat.

"We anticipate a similar market in 2013. The best quality estates are likely to generate strong demand, irrespective of economic conditions, as owning a fine Scottish sporting estate is often a lifetime aspiration rather than a business decision."

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