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Savills Research | Rural Agricultural Land Market Survey 2010
The volume of land traded continued to shrink, a trend However, optimism among farmers coupled with demand
that first emerged in the 1960s (see Graph 1). Market from both UK and overseas investors, who in many cases
activity was severely disrupted twice; in 2001 when foot- sought sanctuary from the turbulence of other assets,
and-mouth disease (FMD) raged through the country and pushed up values to peak levels of around £9,000 per
again in 2003 and 2004 before the details of the Single acre on occasions.
Payment Scheme (SPS) were published.
The average value for all types of farmland across Great
Demand remains undiminished. In fact, the market Britain increased 5.9% during 2009 to £4,450 per acre.
is supported by funds of around £7.5bn. This is the Values have almost regained the ground lost in the
approximate total amount of funds that Savills current second half of 2008 and the first quarter of 2009.
farm applicants have to spend. However, it is unlikely
that all of this money will actually find its way into land. Farmland remains a good investment over the long
Some buyers, frustrated by the inability to find what term, with its steady performance comparable to
they are looking for will look to other investments, which alternative assets. Indeed, more recently, it has
are more easily accessible in the volumes required for outperformed many other asset classes (see Graph 2).
modern-day trading. We expect the interest in farmland to continue, especially
as the need to feed a growing population is now high
on the political agenda. Also, the general trend for
commodity prices looks set to remain positive, albeit with
increased volatility.
Graph 1 Graph 2
The market place continues to shrink Rural assets remain resilient
Traded in England Publicly marketed in England Let Land Farming top 25% Forestry
Let Residential Commercial _ all Equities
Publicly marketed in Scotland
Gilts
800,000 25%
700,000 20%
Annualised total return
600,000
15%
500,000
10%
Acres
400,000
300,000 5%
200,000
0%
100,000
-5%
0
45
50
55
60
65
70
75
80
85
90
95
00
05
-10%
3 yrs 10 yrs 20 yrs 30 yrs
19
19
19
19
19
19
19
19
19
19
19
20
20
Source: Savills Research Source: IPD / Savills Research (some 2009 data est.)
Savills Research | Rural Agricultural Land Market Survey 2010
Graph 3 Graph 4
Two centuries of farmland values Regional supply
350% 45,000
40,000
300%
Capital growth by decade
35,000
250%
30,000
Acres
200% 25,000
150% 20,000
15,000
50%
10,000
0%
5,000
-50%
0
East East North West SW SE Scotland Wales
s
s
00
20
40
60
80
00
20
40
60
80
00
18
18
18
18
19
19
19
19
19
20
Sellers
Analysis of farm transactions, where Savills acted for the
seller or buyer during 2009, indicates that farmers were
once again reluctant sellers, representing, as in 2008,
only 47% of all sellers. This was significantly lower than
the previous two years, when they accounted for around
60% of sellers.
Graph 5 Graph 6
Proportion of farm buyers 2009 The changing buyer profile
Farmer Farmer Non-farmer (lifestyle) Institutional / Corporate
ew ‘lifestyle’
N 80%
buyer
xisting private
E 70%
landowner
60%
Proportion of all buyers
orporate /
C
Institutional 50%
40%
30%
20%
10%
0%
1993 1995 1997 1999 2001 2003 2005 2007 2009
Forecasts
t
However, the current range in values achieved is Our research suggests that across England, the market
wide, and good-quality land is already topping these could easily cope with over 130,000 acres (107,000
figures. Applying our forecasts to these figures could publicly marketed in 2009) whereas in Scotland supply
see the best land reaching £10,000 per acre well before could be double the 27,000 acres publicly marketed last
2015. year before values begin to come under pressure.
In addition, there will be variations in the rate of growth We expect supply nationally to remain constrained over
of values which will be determined by: the next few years. Apart from the traditional reasons for
selling there is little else to motivate landowners to sell.
n Farm size, quality, type and location
n Variation in the prime country house markets The strongest influence of any potential increased
n Supply – mainly debt pressures which will vary by supply is likely to be debt and we expect this factor
farm type, ownership, and off-farm business activities to remain small.
n Demand – especially the strength of demand for
commercial units versus amenity and residential Our research concludes that in many areas a greater
properties supply would create a more ‘normal’ market place and
our forecasts are likely to hold true even if more land
does come to the market. n
Graph 7 Graph 8
Average values – future growth? Arable (Grade 3) values actual and forecast
Average GB (all types) Model results England Scotland
£7,000 £7,000
Model results:
£6,000 2010: 6.3% £6,000
2011: 6.0%
£5,000 2012: 5.7% £5,000
2013: 5.8%
£4,000 2014: 5.3% £4,000
£ per acre
£ per acre
2015: 4.9%
£3,000 £3,000
£2,000 £2,000
£1,000 £1,000
£0 £0
t
t
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01
02
03
04
05
06
07
08
09
as
as
as
as
as
as
75
78
81
84
87
90
93
96
99
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08
11
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20
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20
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20
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20
f ’c
f ’c
f ’c
f ’c
f ’c
f ’c
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