East leads the way in farmland market
KIRSTY MCLUCKIE THE diminishing farming subsidies are having an impact on the value of farmland across the United Kingdom according to a review of the agricultural sector by Rettie & Co. Farmland has in general held its value throughout the financial crisis.
Rettie’s report showed values vary hugely across Scotland, with the east tending to be stronger than the west. The average price is close to £11,000 per acre in Angus, whereas it is only a little over £2,000 per acre in Argyll and Bute.
As more Scottish acres are brought on to the market and supply comes back in line with demand, the report predicts the prices paid by prospective farmland buyers will be further affected by impending lower subsidy payments as well as ongoing reduced commodity prices.
In addition, according to Rettie, much of the new Common Agricultural Policy (CAP) regime remains to be clarified and uncertainty is not helpful to any property market.
Chris Hall, director of rural at Rettie says: “Farmland prices remain mostly at historic highs due to steady demand. We believe that there will be more acres marketed in Scotland in 2015, which means we will see the supply of farmland coming back up in line with demand.
“It is important for those looking to sell, that units are correctly priced and the target markets and buyers identified and catered for within the planned sales campaign.”
Land prices across the UK are another important consideration according to Charlie Dudgeon of Savills. “The Scottish market has always tended to track the rest of the UK market, with perhaps a 15 or 20 per cent lower value per acre.
“Now that is widening. Where in England it is £12,000 per acre, the same quality of land in Scotland might currently only get £8,000.”
He says that such a disparity will attract inward investment. “Scottish farmland is good value and compares favourably with countries like Holland, parts of Germany, France and even Greece at the moment.” Dudgeon says that despite the land reform uncertainty, Scotland is seen as a politically safe place to invest and that will attract buyers globally and the comparably small amount of land coming to the market will help retain value. “In the 1980s there was on average 100,000 acres traded every year, last year that was down to 32,000, with this year only up around 1 per cent.”
He says this means that those wanting to sell can still capitalise on the 15 years of uninterrupted growth in prices.
“There are so few arable farms coming to the market – only 0.3 per cent of land in Scotland is Class 1, with 2.5 per cent Class 2, so the best belts of arable land will always be sought-after.
“As subsidies reduce the quality of land will become more important – the biggest and best will have a real attraction for English or European farmers wanting to expand.
Luke French of Savills’ Edinburgh office is currently marketing two arable farms near Bo’ness in West Lothian, which are good examples of farm property likely to attract the best prices.
He says: “This is, without a doubt, the most significant and exciting farm sale in West Lothian for many years, with an extensive arable acreage, in very good heart, and two good farmhouse and steadings. We’ve seen some parcels of land and smaller units, but nothing of this scale and quality.”
Stacks and North Bank farms, which lie either side of the A904, are currently run as a single holding, extending to 673 acres in total of Class 2 and Class 3 land. The guide prices for the farms are: Stacks Farm with 357 acres, offers over £2.5 million and North Bank Farm with 315 acres, offer over £2.2m.
“There are so few arable farms coming to the market”