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Farmland outperforms other assets as rising values hit record high

Farmland values are 11% higher than 12 months ago and are expected to continue to rise during 2011.

(Source: Knight Frank, 15 Apr 2011)

Headlines:

Farmland values are 11% higher than 12 months ago with values rising by 3% in the first three months of the year.

This means the average value of farmland in England is at a record high.

Farmland has performed far more strongly than many other asset classes over the past 10 years.

Tom Raynham, of Knight Frank’s farm sales team, comments: “This resilience is part of what makes farmland so attractive as an investment and should help ensure farmland values continue to rise during 2011.”

  Q1 2011 12 months 5 years 10 years
Farmland 3% 11% 109% 207%
Prime London Houses 3% 8% 56% 99%
Prime Country Houses 0% 1% -3% 23%
FTSE 100 1% 4% 0% 5%

“When you look at the performance of other investments, such as the FTSE 100, the farmland market has been far less volatile and survived the credit crunch in much better shape. That hasn’t been lost on private investors and we have noticed a lot more interest in good quality arable land and farms, especially now that commodity prices have also started to increase.”

“Wealthy individuals have always enjoyed owning farmland because of its amenity value, tax-planning benefits and as a long-term hedge against inflation, but now they are also starting to look more carefully at its potential to generate an annual return as well.”

Demand also continues to outstrip supply with relatively few potential sellers keen to test the market at the moment. Ironically, we have buyers across the country crying out for good properties. If interest rates rise it will be interesting to see whether more farms are put up for sale, but at the moment there are no signs of any significant increases this year.”

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