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Lifestylers in 'farmland frenzy'

Jaimie Kanwar

A new report reveals that UK farmland is seemingly immune to the credit crunch...

According to the report from Knight Frank, farmland rose in value by an average of 34% in the year to March 2008, with prices rising by 12% alone in the first three months of 2008.

The average value of all agricultural land is now £4621/acre, up from £3459/acre a year ago, with good arable land regularly exceeding £6000/acre. Individual farmers and agricultural businesses accounted for 57% of purchases, whilst lifestyle buyers were increasingly attracted to the market, buying a 29% of farms.

Record increases

Andrew Shirley, Head of Rural Land Research at Knight Frank, comments: “The UK farmland market not only continues to shrug off the credit crunch affecting other property classes, but continues to grow in value at a phenomenal rate.

“The average price of farmland has already risen 12% this year – the largest quarterly increase on record - and is heading towards £5000/acre.

“The key driver behind this growth is a growing number of potential buyers fighting for a limited supply of land. Our research shows that demand has grown almost 19% over the past 12 months while supply has flat-lined.

Serious money invested

He added: “Lifestyle or amenity buyers are still active with 29% of the market, but they now face concerted competition from the agricultural community.

“Investors, attracted by the global commodity boom, are also part of the mix. A number of funds have been set up to invest in UK farmland, but stiff competition and a lack of suitable properties have limited their activity so far.

“However, their presence in the market is an example of the serious amounts of money being invested in agriculture around the world. While this trend continues - and analysts are predicting an extended bull run for soft commodities – UK farmland values should continue to benefit.”