DEMAND for farmland in Scotland outstripped supply in 2020, due to a combination of low volumes, an increase in lifestyle buyers looking for smaller holdings and sustained interest in land suitable for tree planting, according to new research from Strutt and Parker.

Analysis of data from the past 12 months shows the performance of the farmland market was atypical relative to recent years, in terms of both supply and demand.

Supply of farmland to the open market in 2020 was the lowest on record, with just 13,100 acres advertised for sale, compared with a five-year average of 32,800.

Farm agent for Strutt and Parker in Scotland, Diane Fleming, said: “Spring 2020 brought us the unknown world of lockdown and travel restrictions and prospective sellers were also cautious to commit to selling faced with the additional uncertainties caused by Brexit and whether or not a trade deal with the EU would be agreed.

“Active buyers did not show the same restraint, competing vigorously for those farms available for sale, which saw demand quickly outstrip supply.”

82% of farms marketed successfully found a buyer by the end of the year, up 26% on 2019, however more farms were marketed in 2019 than in 2020. There was also a rise in the number of off-market deals, with up to 30% of farms for sale during 2020 were available on a private basis.

Prime arable values remained particularly strong with the price of first-class arable land peaking at £16,000 per acre due to a combination of low supply and high demand from successful agricultural businesses looking to expand.

However, forestry buyers dominated when it came to hill ground.

Ms Fleming said: “As seen in recent years, strong prices are continually paid for land with afforestation potential. Tree planting is backed by government support and afforestation commitments, in the quest to attain carbon neutrality. Private companies and investors are also keen to acquire forests, plant trees or purchase carbon credits to offset their carbon footprint.”

Looking ahead, Ms Fleming said she expected to see the balance between supply and demand become more even in 2021, with the supply of farms coming to the open market increasing.

“We are confident that the farmland market in 2021 will provide much more variety for purchasers, whilst continuing to deliver strong results for sellers.”

There was likely to be a continued shortage in the supply of prime arable land in the eastern counties, so it would continue to demand high values, as would land with potential for tree planting. Demand for smaller farms is also expected to remain strong, bolstered by demand from lifestyle buyers due to the Covid-effect, she added.