Strong land market exists despite Brexit

Fears restrict level of land coming on the market – but appetite for land remains strong

There are not a lot of farms coming to the market in the region

Brexit uncertainty and a lack of supply continues to dominate the Scottish farmland market, according to agents.

Research by Savills suggest that approximately 39,400 acres were placed on the open market in Scotland last year – down 12% on the year before.

The company’s rural director Rory Galloway said the uncertainty caused by Brexit had restricted the level of land coming to the market, however appetite for land remains strong, particularly for quality, well-equipped holdings.

He said that “2017 saw a widening divergence between ‘the best’ and ‘the rest’ with prime arable land on the east coast often making more than £9,000 per acre in contrast to £5,000 for poorer arable land in other areas”.

He added: “In a similar vein, quality pasture in productive dairy areas can achieve over £5,000 where demand is strong”.

Looking to the market in the next couple of years, Mr Galloway said it was likely Brexit uncertainty would continue to reduce the availability of land on the market, thus keeping values up.

However, there was a risk that once the Brexit dust settles that more land will be offered for sale.

James Presly from Aberdeen and Northern Estates – the land and estates division of north-east farmers’ co-operative ANM Group – said Brexit uncertainties had “tempered the enthusiasm” of those looking to buy and sell in the past year.

He said although there was now a “persistent mood of caution in the market”, the north-east continued to represent good value for money to those outwith the area and those south of the border.

Mr Presly added: “We anticipate values to remain steady, broadly reflecting the rates achieved last year.

“The investment qualities and flexibilities of the best arable land in the region may well strengthen this part of the market, leading to a widening gap between the best and most marginal of land types.”

Alastair Campbell, who works in Bidwells’ Inverness office, said the market in the north of Scotland was not particularly buoyant at the moment, however there was demand from existing farmers.

He said: “There are not a lot of farms coming to the market in the region and evidence suggests some consolidation of prices in this area – but not falling too much.

“As always, the better quality units will usually sell well but as the market slows, the units on poorer soil, or requiring investment, are likely to receive less interest.”

Bidwells partner Andrew Wood, who works out of the company’s Perth office, said although there were fewer purchasers bidding for units, quality farms were still very much in demand, particularly in the east of the country and the Borders.

He said: “The market still remains dominated by those looking to expand their businesses. Values for farms – other than those at the very top of the market – have cooled. We are also seeing a strong demand for upland units that are suitable for conversion to forestry.”

Galbraith’s head of farm sales in Stirlingshire and central Scotland, Duncan Barrie, echoed his land agent colleagues and said healthy demand for farmland in 2017 had been driven by a relatively low supply on the market.

He said: “Scotland’s farmland market activity continues to be underpinned by existing landowners and farmers as opposed to significant external investor demand.”

He reported an increased use of borrowed money for farm purchases as buyers took advantage of “cheap money”, however lenders were now taking a more detailed approach to farm purchases resulting in deals taking longer to complete.

Tom Stewart, who leads the farm sales team for Galbraith in Aberdeen, said demand in the north-east remained fairly constant across the board for farms of varying sizes, types and price.

In contrast to the views of other agents, Mr Stewart said the market had not been significantly affected by Brexit so far. He said: “Historically farmers have faced greater challenges and by and large have overcome them. For 2018 we expect demand to remain relatively strong.”

Strutt and Parker farm agent Diane Fleming said although Brexit uncertainty had led to a quieter market than usual in the first eight months of 2017, market activity picked up in the last quarter.

She said 20 farms were launched to the open market between October and the end of the year – four times more than the period in 2016.

Ms Fleming said: “We expect the market in 2018 to be influenced by the future of subsidies, awaited Brexit decisions, the continuance of tax benefits concerning land, and the political outlook of the UK.”

Watten Mains Farm in Caithness, opposite page,was successfully sold by Strutt and Parker last year at an asking price of offers over £2 million. Easter Auquharney Farm near Peterhead, bottom, was the highest priced farm to ever come on the market in...