Record breaking year for land prices

Farmland prices are set to keep growing.

Growth of three per cent in the final three months of the year capped a year in which bare agricultural land out-performed “other leading safe haven assets” of gold and prime central London luxury residential property, property consultants Knight Frank reported.

Increased farmland prices were driven by a continued shortage of land on the market.

There was around 20 per cent fewer acres listed for sale publicly last year, compared with 2013.

Tom Raynham, head of Knight Frank’s agricultural investment team, said: “The investment market continues to focus on agricultural land for a number of reasons but mainly as a source of sheltering wealth and protection longer term against uncertain market forces.

“The election, changes to tax, uncertainty in Europe and changing climates will focus investors’ minds on safeguarding their portfolios.”

Where demand has been strongest, farmland has sold well above average prices recorded by Knight Frank.

Large blocks of arable land achieved the highest values, with as much as £13,000 per acre exchanging hands in 2014.

Looking ahead, Andrew Shirley, the Knight Frank’s head of rural research, added: “A generally gloomy outlook for commodity prices could temper some farmers’ enthusiasm for expansion, particularly in the dairy sector, but most take a long-term view and will still be keen to take on land that will add economies of scale to their existing holdings.”