Despite a backdrop of a double-dip recession and ongoing dairy farm protests, Midland farmland is hot property and enjoying something of a renaissance, according to experts.
Rural chartered surveyors and land agents say a spate of deals for farmland reflects a buoyancy that could only be dreamed of elsewhere, as investors take their money away from the markets towards what they see as a safe haven.
In the past decade the price of agricultural land has nearly doubled in price from an average of £3,000 per acre to around £6,000 and experts at Worcester estate agents Halls said: “We would not be surprised if it doesn’t double again in the next decade”.
Halls has seen a continued rise in the agricultural land market over the past 12 months and while there are many farms coming onto the market, they are also selling quickly and at high prices per acre.
Examples include Martley, Worcestershire, where 13 acres of arable land sold for £9,000 per acre, which represents a rise of more than 12 per cent compared to the value in 2011.
In Cleobury Mortimer near Kidderminster, 26 acres of pasture was guided at £150,000 but sold for £250,000, equating to £9,477 per acre.
This comes after the Royal Institution of Chartered Surveyors Rural Land Market Survey showed farmland prices reached a record high in 2011 on the back of strong demand.
Property adviser Savills sold a number of Midland farms above their guide price last year.
“All sectors of the market sold very well,” said Tony Morris-Eyton from Savills in the West Midlands. “Farmers are trying to spread their cost base and expand elsewhere.
“Wheat prices have held up very well. Commodity prices are all quite high. The dairy sector if finding life more difficult because retailers have dropped the price of milk by about 4p a litre.
“Arable farmers’ cost base is rising, fuel costs are rising. There is not that much land around at the moment. There is quite a shortage of good quality farms.
“Land prices will continue to rise, but not necessarily in a straight line. But it is a very good long term investment. We’re not making more land and world population will continue to grow. In the Midlands we are blessed with a lot of good quality land.”
There is also an increased awareness of other opportunities to grow investments within the agricultural land market, with demand outstripping supply.
Tax advantages have seen a significant level of investment money being diverted away from the stock markets, given their fluctuating returns and there is also interest from strategic investors who view the agricultural market to be relatively stable and are interested in acquiring agricultural land to add to their portfolio.
Halls identified three main types of buyers – commercial farmers, looking to increase their land holding, lifestyle farmers, keen to build a new life in the country and financial investors, aiming to manage issues like inheritance tax.
Also, the mood from banks is that financial support is available for the agricultural sector to assist with expansion plans.
Halls maintain the current market is very strong and there continues to be an increased volume of land this year compared to 2011, but the market has shown no signs yet of reducing.
But the National Farmers Unions said the fact land prices have shot up will be of little consequence to many farmers, unless they are looking to sell up or buy extra land or if they are new entrants to the industry trying to get on the farming ladder.
NFU spokesman Oliver Cartwright said: “The average 2001 price for an acre of arable land was just over £2,000 compared with £5,700 last year, better quality arable land was apparently selling at £6,500 or more per acre in 2011.
“A lot of weight is attached to what land is worth but for the industry it is what is being produced on that land and the price being paid for produce at the farm gate that is of real importance, especially as other costs have gone right up like fertiliser, feed and energy.
“We need to see a fair price paid to farmers in line with production costs as there are massive retail profits not being passed back and we need to see transparent markets.”