Industry Eye: Region has some of the most expensive farmland in the country as volume grows in first three quarters

The volume of farmland marketed across Great Britain during the first three quarters of 2010 increased by 9 per cent to 143,000 acres compared with the same period in 2009.

However, the increase was concentrated in Scotland (+26 per cent) and Wales (+73 per cent), whilst in England supply fell by -1 per cent to just below 100,000 acres.

Savills Farmland Value Survey puts cumulative growth for the first three quarters of 2010 at 9.7 per cent compared with the 6.7 per cent growth recorded in the whole of last year.

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There is a clear pattern of stronger growth for farmland down the eastern side of England than anywhere else, reflecting the strength in the commercial arable farm market.

For example, the North of England and Eastern counties recorded average growth of around 13 per cent, compared to less than 5 per cent in the West Midlands, the South West and South East.

Demand remains strong, with a 56 per cent increase in new buyers registering on our database so far this year, compared with the same period of 2009.

Farmland purchasers continue to be dominated by existing UK based farmers. There are still Dutch and Danish buyers, but these are now matched by almost equal numbers of foreign sellers.

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Uncertainties within other investment markets, coupled with the taxation advantages of land ownership and improved profitability, combined with rising commodity prices throughout the world, should create conditions for demand to remain firm.

Whilst our main baseline forecast remains unchanged at around 6 per cent growth per annum, we expect growth in values to be diverse and largely related to quality.

In Yorkshire we now have some of the most expensive land in the country.

Whilst we started this year with good quality land generally trading for between 6,000-7,000 per acre, there have now been a number of sales recorded in excess of 8,000 per acre, and even one at 10,000 per acre.

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This has created a gap in some cases between vendors' expectations and the amount purchasers are willing to pay.

From our experience, the best prices have been achieved where land is marketed at a sensible price, generally in the range of 6,000-7,000 per acre, and where competition is generated, premium prices have been achieved, but for heavier land and where there is less local competition, values between 4,500- 5,500 per acre are still not uncommon.

We often experience an increase in demand in the run-up to Christmas, often fuelled by an expectation that there would be more land on the market during the year, or even perhaps that values would fall. When it become apparent that neither would be the case, then purchasers entered the market positively. We have received two new instructions in the last week, to sell a 113-acre farm in the Howardian Hills and a 360-acre farm in South Yorkshire, which will be a good test of the continuing strength of the market in the run-up to the year end, and an opportunity for someone to secure the ultimate Christmas present!

CW 27/11/10