Agricultural land is a safe bet for investors

AGRICULTURAL land should be top of the list for anyone looking for a ‘safe’ investment, says land and estate agency firm Strutt & Parker.

Escalating global consumption and a dwindling food supply are just some of the reasons why farmland is a safe bet, illustrated by an increase in the value of farms and estates in Northumberland and the Borders by between 10 and 14 per cent in the last year.

Claire Whitfield, head of farm and estate sales in the north of England for Strutt & Parker, said: “Many premium farms and estates in Northumberland and the Borders have risen in value by between 10 and 14 per cent in the last year, making this autumn an ideal time to bring property to the market.

“The region has seen several diverse properties enter the market since the spring which has added to a successful 18-month period in which Strutt & Parker sold 61 per cent of all farms and estates marketed in the area equating to more than £30million worth of property.”

The livestock market has also seen the launch of several strong properties such as Canada Farm, at Longframlington, a first class Northumbrian livestock and arable farm, said Mrs Whitfield. The 556-acre farm has a guide price of £2.75million. With rising livestock commodity prices and optimism in the market, the farm has seen interest from a diverse number of purchasers.

Mrs Whitfield said: “The harsh winter meant that property was slow to come to the market in the early months of 2011 and the first six months saw a 16 per cent drop in the land available, compared to the first part of 2010.

“However, demand has remained high. In the first three months of the year, cash buyers from outside the region with a total of £66million to spend set their sights on the North East as a place to invest their money. Many of these buyers are still looking.”

She added: “The bad weather may have caused significant damage to buildings but the knock-on effect is that many farms are now benefitting from new or substantially rebuilt buildings, further adding to their appeal to prospective buyers and upping their value.

“Additionally, many arable farmers were able to breathe a sigh of relief when they found that their crops, having been covered in snow for up to eight weeks during the winter, had been protected from the extreme frost and pest damage. As a result, they have been able to celebrate excellent yields compared to much of the rest of the country.

“We have sold 61 per cent of all farms and estates marketed in the region in the last 18 months which equates to £32.4million worth of property. It is interesting to see that the profile of buyers in the area has recently changed substantially, with more than 60 per cent of land sold in the region in the last five years going to purchasers from outside the region. Traditionally, land sold in the North East has been bought by local buyers.”

Put into a global context, UK farmland is a very good investment, she said.

“An increasing demand for food and a dwindling supply as well as crop disease caused by climate change and the pressure to produce biofuels are just some of the reasons why farmland prices are holding their value and seem only likely to go up.

“Additionally, as the BRIC countries (Brazil, Russia, India and China) become more affluent and urbanised their diets are changing and they are consuming more meat, milk and eggs. If the population of China consumes just 1kg more of beef per person next year it will absorb the equivalent of more.

“We are advising a growing number of investors interested in purchasing UK farmland.

“The issues of food production and food security around the world are important to governments and as a result, despite the big rises in land prices in the last four years, I predict farmland prices will rise still further.

“The future looks bright and we are optimistic about the coming months. ”