Investors Enjoying Fun on the Farm

Property investors are making hay while the sun shines - often literally - in the farming sector, with new statics showing the price of rural land hit a record high in the second half of 2012...

Property investors are making hay while the sun shines - often literally - in the farming sector, with new statics showing the price of rural land hit a record high in the second half of 2012. The Royal Institute of Chartered Surveyors (RICS) Rural Land Market Survey revealed that real estate investment in farmland is becoming more than just a sensible choice, with the average price per acre in England and Wales now standing at GBP 6,783.

Rural land prices have been rising continuously since the beginning of 2009, with a shortage of prime units and rising demand helping to drive up values. Commercial farmers have been particularly active in the sector, as they go in search of rural land to expand their production and capitalise on soaring agricultural commodity prices. However, they are particularly demanding large, top quality neighbouring plots, with a small residential component.

This means the gap between the best and the rest is widening. RICS noted that units with lower soil quality or a high residential component are attracting much less interest and lower average prices per acre. With 20 per cent of people noting a drop in the supply of commercial farmland, this price divide is only likely to become more pronounced. However, not everyone is convinced the good times will keep on rolling.

Charlie Evans from Strutt & Parker's farming department stated: "It will be interesting to see if values keep rising on the back of a poor harvest in 2012 and the appalling planting conditions for the 2013 crop. Many arable farmers are likely to have less in their war chest to buy land compared to 12 months ago, so we may see demand for land drop slightly. That having been said, it looks likely supply of land will not increase drastically so I foresee average values levelling off for 2013 before continuing to grow gradually in the longer term" Nevertheless, most surveyors are convinced prices will continue to rise, with 54 per cent claiming that values will increase over the next 12 months.

- Friday 22 February 2013

*This page is provided for information purposes only and should not be construed as offering advice. Flex Profit Hub is not licensed to give financial advice and all information provided by Flex Profit Hub regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.