Farmland growth expected to outstrip inflation by the end of 2010 and prove as good an investment as gold, report claims

Farmland values in the UK continued to rise in the first quarter of 2010 and even outperformed gold, according to a new report.

(Source: www.investmentinternational.com, 19 Apr 2010)

The average rise in value for an acre of grade three arable land during the first quarter was 1%, below that of inflation, but it is expected to comfortably outstrip inflation by the end of the year with annual growth of 5 to 6%, says the newly published Farmland Value Survey report from Savills.

‘Interestingly, gold a commodity that is much easier to trade than farmland recorded some price correction during the same period both in current and real terms,’ the report points out. It says gold fell by 1.9% in the first three months of the year and by 4.4% when adjusted for inflation.

‘We anticipate that growth will comfortably outstrip inflation by the end of the year with gold and farmland continuing to be good hedges against inflation,’ the report adds.

Farmland activity in the eastern counties accounted for just under half of all the acres marketed during the first quarter of the year. Some 43% of all land publicly marketed was in the East, but despite this, values in this region like elsewhere continued to rise.

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Cash buyers now represent over 60% of applicants registered with Savills to buy farmland.

‘The fact that non-farmer buyers have, albeit tentatively, started to re-register their interest in farmland combined with a continuing low interest rate environment leads us to see no reason why farmland values will not gain momentum and we fully expect annual growth to be in line with our forecasts of around 5% to 6%,’ said Ian Bailey head of Savills rural research.

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