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Farmland 'bucking the trend'?

The value of UK farmland appears to be soaring despite the ongoing credit crunch. 

According to research from Savills, farmland values have risen by 29% during the past six months and are forecast to increase further this year, particularly for the best quality land in the most desirable locations.

While the rate of average growth slowed during the second quarter of the year to 10% compared with 17% recorded during the first three months, growth for the first six months of this year is not far behind the 30% achieved for the whole of last year.

Ian Bailey of Savills Research commented: "Farmland continues to significantly increase in value as world food shortages and rising commodity prices make it the choice of a wider range of investors.

"Average values now stand at £5000 per acre although this figure masks the prices now being achieved for prime arable land, which is often realising in excess of £8000 per acre".

Jessica Simpson, of Savills Farm Agency, added: "Although values continue to rise, increased costs have brought yields on farmland back to between 1% and 2%.

"Whilst investors are still in the market for UK farmland, they are currently looking at capital growth over the next 10 years as opposed to short term yields.