SELLERS of farmland underestimate the strength of buyer demand – for the right property in the right location

Brexit-related uncertainty continues to weigh heavily on Scottish farmers’ minds, and decisions over releasing land to the market continue to be delayed, according to the latest research from Savills.

Only 16,200 acres of farmland were publicly marketed in Scotland in the first half 2019 compared with 23,600 acres in same period 2018, a decrease of 31%.

This compares to England where 54,000 acres of farmland were publicly marketed in the first half 2019 compared with 69,900 acres in same period 2018, a decrease of 23%. In Wales 3,860 acres of farmland were publicly marketed in the first half 2019 compared with 7080 acres in the same period of 2018, a decrease of 45%

Head of UK agency at Savills, Charles Dudgeon, said: “It is well documented that market activity over the past 15 to 20 years has been low in the historical context with, on average, farms now changing hands just once every 200 years. However, this year we seem to have almost set a new low. This confirms that in times of uncertainty decisions are delayed until the direction of travel becomes clearer.

“To the end of June 2019, almost the lowest recorded acreage has been publicly marketed land since our records began in 1995. The exceptions were 2001, the year foot and mouth closed the countryside and just 61,000 acres were publicly marketed mainly in the latter part of the year.

“However, whilst sellers appear to be unnerved by the combination of policy change and political, and consequently are deferring decisions to go to market, buyer behaviour has been less effected, which is demonstrated by relatively strong prices achieved. Average values across Great Britain have remained stable during the second quarter of this year and we are predicting this be maintained while demand continues, especially for the ‘right’ farms, in a market where product is very limited.

“The average value of prime arable and grade three grassland across GB is around £8700 and £5500 per acre respectively. This compares to £7600 and £2800 respectively for Scottish farmland.

“A broad range of prices are being achieved either side of the average, with neighbours working quickly to secure rare opportunities to acquire adjoining land and there is renewed international interest in farmland assets in well located areas. In addition current purchasers are largely existing farm businesses with the next generation keen to join the fray either to expand the acreage farmed or to acquire the platform for alternative ventures.

“The recent correction in the value of bare commercial farmland is now creating opportunities for investors to make a reasonable return, and conservation-minded buyers continue to express an interest in marginal and high-nature value areas.

“On the other hand, lifestyle and amenity estate buyers are frustrated by lack of stock and commercial farm buyers are more selective than in recent years. The quality of the property and sensible pricing is now more important than ever before.

“It is very apparent that a conundrum exists whereby farm purchasers want to enact their expansion plans almost irrespective of Brexit while sellers seem to find it hard believe that there is in fact an active market for farmland.”