Market Intelligence Report
Review of the English farmland market July – September 2012 English farmland values constant at £8,900 per acre but bare land rises 4% as land for sale remains at historic low
Key points: • The average price remained at £8,900 per acre in 3Q2012, up 3% in 2012 • Prices broke the £9,000 barrier for the first time, as we predicted, during the quarter but then dropped back slightly • Bare land values rose by 4% to £6,600 per acre, up 10% since the start of the year • Equipped land values dropped back 1% to £9,500 per acre, up 1% since the start of the year • Just over 80,000 acres have been marketed in 2012 so far and, if the trend continues, less than 100,000 acres could be marketed this year, which is the lowest amount ever
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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 over 50 acres; they exclude sales where the residential value of the sale is greater than 50% of the total. Therefore all figures are transaction-based, not opinion based, apart from the regional values which are from our regional farm agents.
Lowest amount of land for sale ever
North West – Simon Waller
Only 29,300 acres were marketed between 1 July and 30 September, 30% less than in the same period last year.
There has been little change in values this quarter. Land in the right location is still attracting interest and some very strong prices have been paid where there are special purchasers, like neighbours or investors. Since moving our office to Clitheroe, we are getting more interest from people coming in ‘off the street’ actively looking for land so good news! We have agreed a sale at the guide price of £6,500 an acre of a versatile 274 acre farm west of Garstang in Lancashire. There is still interest from investors: 60 acres of land with strategic development potential near Carlisle airport attracted significant interest. We have also sold a 300 acre farm and are under offer on 86 acres near Ulverston with a farmhouse in need of modernisation.
Land for sale in England (acres)
3Q2012
3Q2011 (% change in last 12 months)
Bare Land
4,600
8,700 (-47%)
Equipped farms
24,700
33,000 (-25%)
All land
29,300
41,700 (-30%)
Just over 80,000 acres have been marketed this year so far and, if the trend continues, less than 100,000 acres could be marketed this year, which is the lowest amount ever.
Land for sale in England (acres)
2012 to end 3Q2012
2011 to end 3Q2012 (% change in last 12 months)
Bare Land
15,300
21,600 (-29%)
Equipped farms
65,900
93,700 (-30%)
All land
81,400
115,300 (-29%)
Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
3Q2012 £6,000 £5,500 £6,800 21 2,500
3Q2011 £6,000 £5,500 £6,000 23 5,300
3Q2010 £6,000 £5,500 £6,000 18 4,000
East Midlands – Luke Humphries At the risk of sounding like a broken record, prices remain firm, bolstered by the lack of land for sale. The difficult harvest does not appear to have dampened demand. We are selling 90 acres of Grade 2 arable land near Newark at a guide of £6,000 / acre and buyers are showing good interest.
Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
3Q2012 £7,500 £5,100 £9,500 23 4,300
3Q2011 £7,300 £5,000 £9,500 28 7,000
3Q2010 £7,000 £5,900 £9,000 44 6,500
West Midlands – Ed de Lisle A cooler picture in this region compared with the others. Bare land prices are reliant on strong demand from local farmers which, for the right parcel of land, remains competitive. Equipped land sales are not performing as well, with many farmers unable to raise capital; nevertheless sales are continuing to complete. There are some forced sales with good deals to be done. Actual sales demonstrate the variability in the market. We exceeded the guide price in two out of three sales of bare land but sold an equipped farm in Nottinghamshire at 30% less than our guide price.
Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
3Q2012 £6,800 £5,000 £8,000 18 3,500
3Q2011 £7,000 £5,100 £9,100 15 2,500
3Q2010 £6,500 £5,000 £9,000 24 4,400
South West – Simon Derby
Note on regional figures The regional bare and equipped values quoted are based on the opinions of our farm agents. The data on number and acreage for sale is from our comprehensive database of all sales of publicly marketed farmland in England over 50 acres; they exclude sales where the residential value of the sale is greater than 50% of the total. All data is for 3Q.
There is strong demand for arable land, especially from neighbouring farmers, but the shortage of land to buy continues. The farms that are coming to market are smaller, lifestyle opportunities and demand is driven by location, with those in desirable places selling while other locations are sticking. Some owners are taking advantage of strong land prices and selling off small parcels of land to raise capital. Our main sales this quarter have been woodland. We have also sold some smaller parcels of land without publicly advertising them, called off-market sales, at a premium to their ‘on market’ values.
Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
3Q2012 £7,500 £5,800 £10,000 27 4,300
3Q2011 £7,500 £5,600 £9,500 39 5,300
3Q2010 £5,700 £5,500 £6,500 32 7,000
South Central – Giles W
The downward trend in land sup certainly propping up land value ‘popular’ areas. There is strong interest in larger areas of land w or alternatively smaller areas wh investors: the ‘flight to safety’ b for farmland. Investors often re farm the land, and we can arran strong prices are being paid. In Farm for £13,000 / acre and Wo strong residential value but the sold a good block of bare land in acre. In Northamptonshire, the sold for over £10,000 / acre. Th Pusey Estate in Oxfordshire sold and we know of bare land in Ha £10,000 / acre. 3Q Bare arable (£/ac) £ Bare pasture (£/ac) £ Equipped (£/ac) £1 Number of farms for sale Total area for sale (ac)
North East – Iain Welsh There have been few standout sales and the amount of land for sale remains low; despite this, there are farms and sizeable parcels of bare land which remain unsold, which supports our argument for realistic pricing and that buyers are selective in terms of quality and location. Although the general feeling in the region is that confidence has fallen a little due to the disappointing harvest and uncertainty in some commodity markets, our sales results would not support that view as we sold all the land we marketed this summer. This included 100 acres of arable land near Stocksfield, Northumberland, which exceeded expectations and a 331 acre arable and grass farm, near Durham City, for close to its £2m guide price. We have just launched 332 acres of land and property in five lots near Shotley Bridge in County Durham and are expecting keen interest from local farmers, contractors and investors. Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
3Q2011 £5,800 £4,000 £7,500 7 2,900
3Q2010 £5,750 £4,000 £7,500 13 5,300
The average price remained at £8,900 per acre in 3Q2012. It has risen by 3% since the start of the year and by 6% in the last 12 months. Prices broke the £9,000 barrier for the first time, as we predicted, during the third quarter but dropped back slightly to end at £8,900. However, the apparent stability in the value of farmland masks a difference in performance between bare and equipped land, which is land with houses and buildings. Bare land values have risen by 4% to £6,600 per acre since 1 July. Equipped values have dropped back £100 per acre to £9,500. 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.
Yorkshire and Humber – Sam Tydeman Prices are holding firm in the region - there is no evidence that they have fallen. As in other regions, there are very few decent sized commercial farms for sale. A lot of sales are small blocks of bare land and they are generally selling well, often to local farmers. There is also strong demand for woodland, as reported in other regions: we sold a large conifer plantation for over £3,000 / acre, which was well above its guide price. The availability of capital to fund purchases is becoming more of an issue. We do not expect the amount of land for sale to rise significantly in 2013. Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
3Q2012 £7,000 £4,750 £8,000 16 2,500
3Q2011 £7,000 £4,750 £8,000 17 3,800
3Q2010 £6,000 £4,000 £7,500 24 4,300
East of England – Bennett Swayne Smiths Gore offices
Wordsworth
pply is continuing and is es and creating spikes for g and growing investment which can be farmed as a ‘unit’ hose value is suitable for smaller by investors is boosting demand equire tenants or contractors to nge and manage them. Some Wiltshire, we sold Ciffansty ood Farm for £12,000; both had latter was half woodland. We n Wiltshire for nearly £8,000 / e 600 acre mixed Marston Lodge e 500 acre arable and wood d for in excess of £10,000 / acre mpshire, which sold for
Q2012 £7,750 £6,000 10,000 20 3,400
3Q2012 £6,000 £4,250 £7,500 6 1,000
Bare land prices rise 4% while equipped land prices dip 1%
3Q2011 – – – 29 4,300
3Q2010 – – – 20 4,500
The supply of farms for sale is falling although there have been more marketed since the start of September. Limited land to buy and investors, both farmers and others, with funds seeking land continue to push prices higher so sale results remain strong. The sale of the 1,337 acre Hengrave Estate in Suffolk completed at significantly in excess of the guide price of £15m. 204 acre Bottom Hakes Farm in Cambridgeshire sold in excess of its guide of £1.4m and 263 acres at Quinbury in Hertfordshire sold in excess of its £2.3m guide. Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
3Q2012 £8,250 £5,000 £9,000 21 5,100
3Q2011 £6,750 £4,250 £7,700 20 8,800
3Q2010 £5,750 £3,000 £7,000 24 4,900
South East – David Slack Land still continues to achieve high prices based on the continued lack of supply and the consistently high demand. The increase in land for sale that I reported earlier this year has dried up and land remains at a premium. Most sales are blocks of bare land and there are still very few whole farms coming to the market; this is unlikely to change in the immediate future. There are a number of deals being negotiated off-market and we expect some good quality farms to be marketed early in the New Year. Bare arable (£/ac) Bare pasture (£/ac) Equipped (£/ac) Number of farms for sale Total area for sale (ac)
3Q2012 £7,500 £5,750 £9,500 9 2,600
3Q2011 £5,750 £5,500 £7,500 8 2,400
3Q2010 £5,200 £5,000 £7,000 15 2,200
Average price in England (£/ac)
3Q2012 (% change since 2Q2012)
2Q2012
3Q2011 (% change in last 12 months)
Bare Land
£6,600 (+4%)
£6,300
£5,800 (+13%)
Equipped farms
£9,500 (-1%)
£9,600
All land
£8,900 (0%)
£8,900
£9,200 (+3%)
£8,400 (+6%)
Farmers remain the dominant buyers and are competing strongly for bare land. As most bare land sales are for smaller areas than equipped farms, more farmers can raise the capital to bid for them, so there tends to be more competition. There is growing evidence that availability of capital is affecting the market. However, 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.
Summary We continue to expect values to rise in 2013. Our statistical model of the English farmland market estimated that prices would rise by 7% in 2012 and they have risen, year-on-year, by 6% - so far! The model estimates a 7% rise in 2013 but this may be on the bullish side given the comments from our farm agency team. At worst, values should not fall. Market fundamentals have not changed significantly but there is more evidence of stable prices or the market ‘taking a breather’. As we said last quarter, the market is becoming more discerning: demand for the best quality land is being supported by good medium-term commodity markets and a continuing positive outlook for UK agriculture, and this will support land prices. However, less attractive land is attracting fewer bidders and is being negatively affected by lack of finance for some buyers. We expected less land to be marketed in 2012 as the amount of land for sale before a CAP reform always drops. We think that this effect will continue into 2013 with the only caveat being if landowners want to sell to cash in if they think that the market has peaked.
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: National Head of Farm Agency
Giles Wordsworth
Oxford
01865 733302
Northern England – Head of Farm Agency
Sam Tydeman
York
01904 756303
North East North West Yorkshire and Humber West Midlands East Midlands
Iain Welsh Simon Waller Sam Tydeman Ed de Lisle Luke Humphries Andrew Teanby
Darlington Clitheroe York Lichfield Peterborough Lincoln
01325 370500 01200 411052 01904 756303 01543 266407 01733 559322 01522 539555
Southern England – National Head of Farm Agency
Giles Wordsworth
Oxford
01865 733302
East of England South East and South Central South West
Bennett Swayne David Slack Giles Wordsworth Harry St John Simon Derby Toby Perry
Newmarket Maidstone Oxford Oxford Taunton Exeter
01638 676748 01732 879053 01865 733302 01865 733304 01823 445036 01392 294891
Wales
Charles Orr-Ewing
Sennybridge
01874 636868
Scotland – Head of Farm Agency
John Coleman
Edinburgh
0131 3440881
Southern Scotland Northern Scotland
John Coleman Kay Paton Jamie Watson
Edinburgh Dumfries Fochabers
0131 3440881 01387 274394 01343 823005
If you have any questions about the review, please contact Dr Jason Beedell, Head of Research, on 01733 866562 or jason.beedell@smithsgore.co.uk