Industry Eye: The market is crying out for a good commercial farm as land values show increase of 9pc across country

Savills research shows that about 158,000 acres of farmland was publicly marketed in Great Britain last year, being an 11 per cent increase on 2009 but still 30,000 acres less than in 2007 and 2008.

In England the total was 107,000 acres, which was similar to the previous year although there were regional variations.

In the north, just over 25,000 acres were sold, which was a 10 per cent increase on the previous year, however increased volumes in Cheshire, Cumbria, Durham and Lancashire masked a slight fall in the North.

Values rose approximately 9 per cent across the country, especially in the arable counties, with a 13 per cent rise recorded in Yorkshire and the North. The increasing values during the first half of the year were as a result of supply and demand, as the main selling season was over before the surge in wheat prices.

Although prospects for the cereals sector remain optimistic, there are concerns on what effect this will have on the livestock industry.

Last year, Savills sold over 262m of farmland, comprising 31,130 acres in total, retaining our position as market leader, handling more UK farmland than any other agent.

In Yorkshire just over 10,270 acres of commercial farmland was marketed, which is broadly similar to the last five years.

Bareland offerings of at least 20 acres in size amounted to 5,951 acres which was up 13 per cent and included 3,500 acres of arable land and 2,400 acres of grassland.

A wide range in values developed, with poorer or less sought after land selling for between 4,500-5,500, average commercial land for between 6,000-7,000 and, where competition was generated for better blocks, prices were reported between 8,500-10,000 per acre.

Commercial arable farms were yet again in short supply, with just ten farms offered for sale averaging 306 acres.

Demand is now generated on a national basis and the market is crying out for a good commercial farm.

The acreage of grassland farms halved during the year to 1,260 acres comprising eight farms, however with the exception of one large 450-acre farm, the remainder averaged about 115 acres in size.

I still believe that the market will be characterised by tight supply, strong demand for commercial farms and a two-tier market for bareland. Savills research model predicts rises in land values of 6 per cent per annum, and having achieved double this rate of growth in 2010, I personally expect land values to remain at or around current levels for 2011, although this already masks a wide variation in values dependent upon land type and location.

There is continuing pressure on weaker businesses from the banks, and perhaps some will sell this year to take advantage of the high prices.

Purchasers will continue to be dominated by those seeking to buy land as a hedge against inflation and rising commodity prices together with those recognising the Inheritance Tax benefits, who could now be joined by cereal farmers seeking to reinvest some profits.

Andrew Black of Savills can be contacted on 01904 617831. email: ablack@savills.com

CW 22/1/11