Land values holding firm as demand defies Covid-19 concerns

Despite all the forecasters predicting a big fall-off in property values as a result of Covid-19, auctioneers around the country are reporting a robust market, with values holding firm.

The land market remains strong, with a number of good sales taking place since the lockdown concluded. All the evidence suggests that values are holding up, with no fall-off in demand.

Many agents have reverted to the private treaty method of selling, with very few auctions taking place. This will hopefully change in the autumn as the restriction on numbers attending gatherings are eased.

The main players in the land market are still very much dairy farmers, with many seeking to expand their herd and seeking additional grazing platforms. These farmers are prepared to travel to acquire holdings and have the option of using outside farms for fodder purposes or to bring along young heifers as replacements.

The other notable change in the market in recent times is the re-emergence of business people bidding on good-quality and well-located holdings. Some are buying for hobby farming, others may have family with equestrian or sporting interests that requires space.

GVM also had an investor who recently purchased land and leased it, availing of the attractive tax breaks associated with long-term land letting. While the yield is low, land does not require any real maintenance. There is no associated property tax. Land is rightly perceived as a safe asset type that has held value through thick and thin, economically or otherwise. Money is cheap to borrow now, and people with money are keen to invest in a safe and secure asset. What better than a nice parcel of land?

In some parts of the country (particularly where there are strong equestrian interests), buyers are using land as a mechanism of transferring wealth. Agricultural land again has favourable status in this regard.

Average prices in the mid-west vary from €7-10,000/ac, with Kildare, Meath, Louth, Dublin, Wexford, Kilkenny and part of Wicklow the hotspots.

A parcel of land in Maynooth sold at auction recently by Eamon O’Flaherty fetched €22,000/ac.

Demand for forestry land continues unabated. GVM recently sold 32 acres for €185,000, or €5,780/ac.

Many investors and funds are chasing suitable land for commercial plantations. Price is influenced by land quality, proximity to roads, water courses, overhead pylons etc. The value of standing and mature forestry depends on the wood type, with Sitka spruce now the most popular.

There is also some increased demand for land designated a Special Area of Conservation, with grants available and farmers are using such land to activate entitlements. Entitlements are fetching approximately 2.5 times their annual value, with the higher-valued entitlement achieving a better price.

Letting values are a little flat this year, just about holding their own on 2019. The very difficult year just gone for beef farmers is a big contributing factor in this easing of demand.

The main players in the land market are dairy farmers

Tom Crosse is group director of GMV Auctioneers