A RISE in demand for hill farms and bare land with the potential for afforestation was the biggest change in the farmland sales market last year, according to Strutt and Parker’s Scotland Farmland Market Review 2019.

A continuing development was the expansion of the traditional sales period with farm launches taking place in the autumn, resulting in a proportionate rise in unsold farmland at the end of the year.

Strutt and Parker’s research found that more land came to the market in Scotland than at any other time in the last 10 years with 120 farms marketed in 2018, up from 81 in 2017. A total of 45,200 acres hit the market, a 44% increase from 31,300 acres in 2017 and in comparison with a five-year average of 34,800 acres.

Almost a third of farms marketed last year were arable units; just a fifth of those included prime soils, a shortage which is an ongoing and historic trend in Scotland.

The report found that demand was strongest for prime arable farms and those with diversified income streams; record-breaking values were achieved for prime arable land in East Lothian (highest £14,600 per acre) and Angus (highest £17,000 per acre) which equated to a 20% increase on previous years. The premium values achieved last year brought prime Scottish farmland into line with its English equivalent.

Livestock farms remained a significant proportion of the market while the volume of hill farms rose considerably, with 26 sales this year compared to seven in 2017 and nine in 2016.

The farmland review reported a limited supply of large farms with just 19% – or 23 farms – larger than 500 acres and just five farms over 1000 acres.

The majority of sales were the result of a competitive closing date, although farms were now more likely to receive just two or three offers compared to several bids which was the norm in past years.

Writing in the report head of estate and farm sales for Strutt and Parker in Scotland, Robert McCulloch, said: “The main driver for selling was retirement, which is perhaps unsurprising considering an ageing farming population and the future challenges faced by successive generations and new entrants to farming. Some wished to downsize whilst continuing to farm and others opted to expand by selling and purchasing larger or higher quality farms.

“Buyers varied depending on farm type but were predominantly local farmers, ‘rollover buyers’, English and Northern Irish farmers and forestry investors. The view that purchasers’ money can go further north of the border and at this side of the Irish Sea continues to attract buyers from outside Scotland.

Mr McCulloch said: “In recent years, we at Strutt and Parker have sold farms across all regions and have developed a strong market share, particularly in the north of Scotland. Over the past 24 months, we have sold 70% of farms over 100 acres in the Highlands.”

Illustratively, Olrig Mains, an outstanding 518-acre mixed farm in Caithness, was one of the principal successes in the north this year. The mixed arable and stock farm with exceptional views across Dunnet Bay to Orkney and priced at offers over £1.75m, attracted stiff competition and was particularly indicative of the strength of demand for prime farmland in Caithness, which remained highly sought after.

Mr McCulloch added: “In summary, the farmland market performed well last year; the volume of land on the market increased, demand was generally positive, average land values were largely unchanged and in some instances unprecedented prices were achieved.

“However, market buoyancy was set against a fragile year for agricultural businesses, which had to cope with political uncertainty, looming changes in subsidy payments, increasing input costs and perhaps the most testing factor – the wrath of mother nature.

“We envisage that in 2019 the market will continue to be characterised by extremes, dictated by land type, flexibility of land use and geography. The increasing age of farmers and their desire to retire will support supply whilst demand will be underpinned by scarcity of prime land and forestry investment opportunities.”