Market Intelligence Report
Review of the English and Scottish farmland market January – March 2013 Is the market waking up as most land for sale for five years? Values stable but we will not really know until the second quarter
Key points: • 17,800 acres were marketed in England, the most in the last five years, so the low supply might finally be increasing • We expect around 100,000 acres for sale again as there are few forced sales and landowners wait to see the detail of the CAP reform • The average price remained at £9,100 per acre in England and £5,930 in Scotland • Both bare and equipped land values are at historic high levels • For 2013, our statistical model of the market estimates that values will rise 7%. However, this may be bullish and the rise could be lower. We expect bare land prices to increase faster than equipped land
All figures in this review, from Smiths Gore’s research department, are from our comprehensive database of all sales of publicly marketed farmland in England and Scotland over 50 acres; they exclude sales where the residential value of the sale is greater than 50% of the total. Therefore figures are transaction-based, not based on opinion like other firms’, apart from the Scottish and regional values which are from our regional farm agents.
smithsgore.co.uk
Scotland – John Coleman
More land for sale 17,800 acres were marketed in England in 1Q2013, the highest amount in the last five years, which suggests that the low supply of land for sale might finally be increasing.
Land for sale in England
1Q2012
1Q2013
(% change in last 12 months)
(acres)
Bare land
3,800
5,500
(43%)
Equipped farms
12,300
All land
17,800
Land for sale in England
1Q2013
(number of farms for sale)
Bare land
67
All land
111
Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
1Q2013 £5,850 £3,450 £6,250 9 1,400
1Q2012 1Q2011 £5,500 £4,500 £3,500 £3,000 £5,000 £6,000 17 9 3,711 1,723
North West – Simon Waller
12,400
No change in values from last quarter. There is still interest from buyers but little for them to buy; we hope to have a few new farms for sale as their current owners retire. Having a high street presence in Clitheroe has certainly raised our profile amongst the farming community. We sold Cumbria County Council’s 98 acres East Park Farm, near Carlisle, to a local farmer at almost £17,500 per acre - but this is exceptional! We also sold the Council’s 87 acre Beech Farm to the tenant. Farms and the farmland market in Cumbria remain strong as the recent sales prove and shows that good quality land in the right location is still as popular as ever.
(0%)
16,200 (10%)
1Q2012
Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
(% change in last 12 months)
29
44
Equipped farms
There has been little activity in the Scottish market and with so much snow on the ground we will have a later start than normal. There has been one significant private deal at Kincaple Farm near St Andrews, where a consortium of local buyers missed out to an Irish purchaser with Capital Gains Tax roll-over funds. We expect there will be a shortage of acres offered for sale this year, which will put further pressure on prices.
(52%)
1Q2013 £6,000 £5,500 £6,900 12 1,327
1Q2012 £6,000 £5,500 £6,800 9 1,611
1Q2011 £6,000 £5,500 £6,000 14 1,819
West Midlands – Ed de Lisle We expect business as usual here. Although there have been no notable sales in the first quarter, the market will become much more active after Easter and we have a number of properties lined up in anticipation.
59 (14%)
88
Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
(26%)
In Scotland, only 9 properties totalling 1,400 acres were marketed.
1Q2013 £6,800 £5,000 £7,500 16 1,631
1Q2012 £7,000 £5,100 £9,100 10 1,508
1Q2011 £6,500 £5,000 £9,000 7 1,865
South West – Simon Derby
2012 had the lowest amount of land marketed ever, at 90,500 acres in England; there had never been less than 100,000 acres marketed before. The outlook for 2013 is already better but we don’t still don’t expect much more than around 100,000 acres for sale as there is not a significant number of sales being readied for marketing in the spring. In Scotland, 39,500 acres were marketed in 2012 and again, we don’t expect much more this year.
Despite a number of new farms coming to the market, supply this year appears to be down as predicted. Prices have remained at the levels reported at the beginning of the year, however, once sales results are known we will get a better of idea of where land values are. Off-market sales continue to be agreed on bare land with agreed prices in excess of average values for the region. Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
1Q2013 1Q2012 £7,500 £7,500 £5,800 £5,700 £10,000 £9,600 28 11 3,506 1,527
1Q2011 £5,400 £5,500 £6,400 17 2,156
Area of English farmland marketed South Central – Giles Wordsworth
Area of farmland marketed in England Source: Smiths Gore Research
Acres
Sales confirm that quality remains the key driver to achieving premium prices, which can vary significantly from one part of a county to another - there is prime, secondary and tertiary land in all counties. It is not certain how the poor harvest and poor spring will affect farmers’ demand for land; logically, it should take some buyers out of the market as they had a more difficult financial year but many will still go for land if an once-in-a-generation opportunity arises.
Acres
70,000
70,000
60,000
60,000
50,000
50,000
40,000
40,000
30,000
30,000
20,000
20,000
10,000
10,000
0 06Q1 0
07Q1
08Q1
Bare land
09Q1
10Q1
Equipped land Bare land
Equipped land
11Q1 All land All land
12Q1
13Q1
Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
1Q2013 £7,750 £6,000 £10,000 11 1,833
1Q2012 – – – 13 1,566
1Q2011 – – – 18 2,174
NB The regional bare and equipped on the opinions of our farm agents acreage for sale from our compreh publicly marketed farmland in Engl sales where the residential value of of the total. All data is for 1Q.
North East – Iain Welsh Still a dearth of activity in the market with very few notable farms launched this Spring. Prices remain firm with what little land has been offered and traded in the open market. As ever, location, quality and local demand continue to dictate prices with some significant variations in the region. We have some large bare land sales in the pipeline with smaller units due to be launched shortly. We await with interest how the market reacts to the launch of Alcan Farms’ agricultural portfolio of 4,000 acres near Morpeth in Northumberland. Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
1Q2013 £6,000 £4,250 £ 7,500 4 756
1Q2012 £5,800 £4,000 £7,500 5 2,089
1Q2011 £5,800 £4,000 £7,500 2 186
Both bare and equipped land values remain at historic high levels Values appear stable but we will only be able to judge this in the second quarter, once more land has been marketed in what is usually the busiest quarter of the year. The average value of English farmland remains at £9,100 per acre. It has risen by 5% since the start of 2012, compared with an increase of 14% during 2011. Bare land values remain at £7,000 per acre, up 17% over 2012.
Yorkshire and Humber – William Douglas There continue to be some stand out results but these are many associated with hotspots. The general market has been slow to get going with little launched to truly test buyers’ mettle. Confidence is waning with some farmers as the appalling autumn continued into a snow bound spring. We will test market interest for livestock farms with a 380 acre equipped mixed farm in North Yorkshire. With a good house, holiday cottages and useful range of buildings, we expect it to appeal to a variety of buyers. Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
1Q2013 £7,000 £4,750 £8,000 6 1,640
1Q2012 £7,000 £4,750 £8,000 11 1,519
Average price in England
1Q2013
1Q2011
(% change since
(£/ac)
4Q2012)
(% change in last 12 months)
Values have not changed since the end of last year but very little land has been marketed. Time will tell to what extent confidence has been hit by the difficult weather conditions faced over the winter and what this effect will have on prices as we get further into 2013. With the exception of some significant off-market deals, there is still a lack of supply so price volatility is expected to remain low. 1Q2013 £7,500 £5,100 £9,500 14 4,194
1Q2012 £7,300 £5,000 £9,500 12 2,261
1Q2011 £7,250 £5,900 £10,000 13 2,370
East of England – Sam Tydeman
Smiths Gore offices
d values quoted are based s; the data on number and ensive database of all sales of land over 50 acres; they exclude f the sale is greater than 50%
£9,700
(+17%)
£9,400
£9,700
(+0%)
£9,100
All land
£6,000
£7,000
(+0%)
Equipped farms
East Midlands – Luke Humphries
Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
£7,000
Bare land
1Q2011 £6,000 £4,500 £7,500 12 2,456
4Q2012
(+3%)
£8,800
£9,100
(+0%)
(+4%)
In Scotland, prices are also stable following rises for bare arable and equipped farms in 2012. As we said in our previous quarterly update, the market may have reached a natural threshold in terms of land values for equipped land but this will only be tested once more land becomes available in the Spring and Summer. As throughout 2012, the market fundamentals that are driving prices up have not changed – the amount of land to buy is still very small and demand from farmers, in most places, remains strong.
Prices have not changed since the end of 2012 and there has been nothing offered in the immediate area this Spring so far. Some farmer demand may be tempered by last year’s harvest and the prospect of another poor year on heavy land as a result of last year’s effects and terrible weather so far this year. Everything is going to be very late. As we know, however, farmers don’t like to let the opportunity to buy adjacent land pass them by! We are selling Longholes Stud, one of Newmarket’s oldest studs which has stabling for 50 horses. Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
1Q2013 £8,250 £5,000 £9,000 13 1,659
1Q2012 £7,500 £4,250 £8,000 11 2,985
1Q2011 £6,000 £3,000 £7,000 9 2,463
Farmland values in England (£/ac) Source: Smiths Gore Research
English farmland values £/ac
£/ac 10,000
10,000
9,000 8,000 7,000
9,000 8,000 7,000
South East – William Banham
6,000
6,000
Stationary prices and a largely stationary market. So no change there! Only two farms over 250 acres were advertised and most sales have been of smallish (50-100 acre) blocks of bare land.
5,000 4,000
5,000 4,000
3,000
3,000
2,000
2,000
1,000 0 07Q1 1,000
Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
1Q2013 £7,500 £6,000 £9,500 7 1,226
1Q2012 £7,000 £5,500 £8,500 6 1,127
1Q2011 £5,500 £5,250 £7,250 3 952
0
07Q1
07Q2
07Q3
07Q4
08Q1
08Q2
08Q1
08Q3
08Q4
09Q1
09Q2
09Q1
Bare land
Bare land
09Q3
09Q4
10Q1
10Q2
10Q1
10Q3
Equipped land Equipped land
10Q4
11Q1
11Q2
11Q1
11Q3
All land
11Q4
12Q1
12Q1
All land
12Q2
12Q3
12Q4
13Q1
How the farmland market has performed during the recession Land has been one of best performing assets. Farmland values have risen by 22% since mid 2008, from £7,400 per acre to £9,100 per acre now. There are a number of reasons it has performed so well. Its value is driven by different factors than assets like shares or commercial property or houses. The high commodity prices since 2008 have driven farm incomes up, making more farmers want to expand. This demand, coupled with increased demand from non-farmer buyers including investors, has chased fewer and fewer acres for sale. All land is not the same and the biggest increases in value have been for bare land, which has risen 70% from £4,100 per acre to £7,000.
Our forecasts for 2013 Average value of English farmland up +7%, according to our statistical model of market. However, this may be bullish and the rise could be lower. We expect bare land prices to increase faster than equipped land. Around 100,000 acres for sale again as there are few forced sales and landowners wait to see the detail of the CAP reform. The main risk to this forecast is landowners selling at what they believe to be the top of the market.
Contacts Our regional farm agents would be pleased to give you more information about the land market in your region or county. Please do not hesitate to contact them:
Great Britain National Head of Farm Agency
Giles Wordsworth
London
0207 409 9490
England
Giles Wordsworth Sam Tydeman
London Newmarket
0207 409 9490 01638 676743
North East North West Yorkshire and Humber West Midlands East Midlands East of England South East South Central South West
Iain Welsh Simon Waller William Douglas Ed de Lisle Luke Humphries Sam Tydeman William Banham Giles Wordsworth Harry St John Simon Derby Toby Perry
Darlington Clitheroe York Lichfield Peterborough Newmarket Maidstone Oxford Oxford Taunton Exeter
01325 370500 01200 411052 01904 756303 01543 266407 01733 559322 01638 676743 01732 879058 01865 733302 01865 733304 01823 445036 01392 294891
Scotland Head of Farms and Estates Agency Team
John Coleman
Edinburgh
0131 344 0881
If you have any questions about this review, please contact Dr Jason Beedell Head of Research t 01733 866562 e jason.beedell@smithsgore.co.uk
Gerald FitzGerald Head of Property Investment and Valuations t 0207 4099492 e gerald.fitzgerald@smithsgore.co.uk