Sticky land values ahead, says report

MORE farmland is likely to enter the market in 2016, leading to depressed prices, according to a new report.

Record levels of farm debt and weak commodity prices, combined with reduced subsides will have an impact in the year to come, according to the report by land agent Savills.

Supply in Scotland was up by 23 per cent in the 12 months to the end of September 2015, to 37,000 acres compared with the same period the year before.

Despite a good harvest in terms of yield, changes to the support system and poor commodity prices have created a tougher market, the report points out, and units are taking longer to sell as more due diligence is undertaken and funding arranged.

‘With UK farm debt at a record high, and prospects for improved commodity prices looking gloomy, more farms are likely to appear on the market in 2016 and this may have an impact on land values,’ said Luke French of Savills.

‘However, with farmland supply at record lows, the fundamentals for why land is a good long-term investment remain the same.

‘What is very evident is the resulting regional variation in average land values across all land types. Best in class continues to sell and sell well,’ he added.

According to Savills, buyers of Scottish farms continue to be predominantly farmers, many with funds from renewable projects and development land, in contrast to the English market where lifestyle buyers returned to the list of active purchasers in 2015.