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Farmland values increased by 7.4% in the first three quarters of 2011

Farmland is still regarded as a safe haven for investment particularly in the context of other asset classes.

(Source: Savills, 25 Oct 2011)

Average farmland values continued to nudge upwards during the third quarter of 2011, albeit at a slower rate than in the previous two quarters.

The supply of farmland remains constrained with only the eastern and southern regions of England recording growth in the volume of publicly marketed land.

Farmland continues to be in demand with the number of potential buyers registered with Savills at a similar level to the past few years.

Farmland is still regarded a safe haven for investment particularly in the context of other asset classes, despite economic uncertainty, the volatility of farm input and output prices and the current reforms of CAP.

Farmland Values

In England, average grade 3 arable land values rose by 1.1% during the third quarter of 2011 giving a total rise of 7.4% in land values in the first three quarters of 2011. The more muted value growth was generally consistent across the regions.

This report focuses principally on average farmland values but it should be noted that prices are sensitive to land type, quality and location. The range of prices paid continues to be diverse and in some cases land has been sold well above the average values quoted in this bulletin.

Farmland Supply

Savills research shows the volume of publicly marketed farmland across Great Britain in 2011 increased marginally (1%) during the first three quarters of 2011, compared to the first three quarters of last year.

This modest rise in supply is entirely due to an increase in the volume of land marketed in the East, the East Midlands and the South East of England only.

Market activity was down in Scotland, Wales and all other English regions. Interestingly, the distribution of marketed farmland appears to be almost the opposite of last year.

In the first three quarters of this year 107,500 acres were publicly marketed across England with 52% of this farmland located in the Eastern regions.

Farmland Outlook

The ongoing global economic woes, which look likely to persist for the foreseeable future, will only act to strengthen farmland’s position as a ‘safe haven’. Even in these uncertain economic times, the performance of farmland is comparable with that of gold and oil – all being recognised as hedges against inflation. In addition, the performance of farmland has outstripped residential assets and it has been less volatile than equities.

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