Continuing farmland demand
THE crystal ball for 2015 is looking
fairly opaque, but with limited 2015
sales instruction and continued demand,
there is likely to be a repeat of the
2014 market – plenty of demand versus
limited supply.
In total, 49,250 hectares (121,700 acres)
were marketed last year. Based on
the year to date, we would expect the
total for 2014 to be lower than this at
44,515-56,540ha (between 110,000 and
115,000 acres).
In the last six weeks, 61 new properties
covering 4,330ha (10,700 acres) have
been launched, which is 485ha (1,200
acres) – 13 per cent – more than during
the equivalent period last year and
16 per cent more than the five-year
average.
Less land
However, over the year to date, there
has been 9 per cent less land marketed
compared to the same point in 2013.
The equipped land area is 10 per cent
lower, while there has been 3 per cent
more bare land marketed than in 2013.
The market is definitely changing with
greater regard to larger blocks of land
with limited liability in terms of ‘bricks
and mortar’.
Country estates continue to remain
popular, but only if they are not
geographically challenged and the main
house is not a complete sinkhole for
money. People are prepared to invest
money in refurbishment and renovation,
but not a total rebuild. While really
large, older houses might show well
in a magazine or on a website, when
it comes to buying, they are not as
popular.
The farmland market has become
more discerning as prices have
increased. The market continues to
be based on demand from local and
regional farmers, with a number of
larger investors (many of whom have
already set up farming businesses)
still looking for large lumps of land,
but not necessarily wanting the large
farmhouse.
Looking at supply by region, it is
notable how few opportunities there
are each year to purchase some types of
farms in some regions.
For instance, there have only been six
dairy farms marketed outside the South
West.
There will continue to be popular
counties, as we saw with the sale of
Trinley Estate along with other sales
in Hampshire in 2014, but as prices
have increased, so have purchaser’s
requirements, and if these are not met,
they will not engage.
The election in 2015 is already causing
a few headaches, as it will coincide
with the usual time to launch the
marketing of larger properties and
farms/estates.
Most look at their best at the end of
April and into May and with an election
in May, vendors are going to need to be
careful with the timing of marketing to
ensure it is not lost in the swill of media
saturation surrounding the election.
Most do not believe the election will
affect land or property prices in the
short-term but a general election is
always a distraction.
A far greater factor will be the
uncertainty leading into the EU debate
and also the cold whispers of reentering a global recession which some
have mentioned recently.
Strong demand
None of these issues will have a
dramatic effect on prices due to such
strong demand and global market
uncertainty often increases investment
in land and property being a longer
term finite entity.
Sellers will need to temper their
expectations as the market becomes
more discerning. Equally, buyers will
need to be more realistic in seeking
their Xanadu in a limited market.
The Smiths Gore land market model
predicted a seven per cent increase
in the all land value for 2014 which
appears to be about right and looks
likely to be of similar vein again for
2015 but with the top of the market
levelling off.
By Giles Wordsworth, Head of estates
and farm sales, Smiths Gore