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Farmland values increased 13% in 2010 and could rise a further 7% in 2011

English farmland outperforms equities and other property assets in 2010 as values increase by 13%, according to the Knight Frank Farmland Index.

(Source: Knight Frank, 07 Feb 2011)

Key points:

English farmland remained virtually flat in the fourth quarter of 2010, but farmland prices still ended the year 13% higher following strong growth in the first half

Over the same period the FTSE and prime residential property in central London grew in value by about 10%. Prime country houses prices rose by just 3.3%

Farmland values are predicted to climb by almost 7% in 2011 as confidence returns to the market

Andrew Shirley, head of rural land research at Knight Frank, commented:

"The average value of English farmland rose by just over 13% last year, outperforming even prime London residential property and the recovering FTSE. This was a particularly strong performance given that there was virtually no price change in the second half of 2010 and reinforces farmland as one of the top performing assets of this century so far.

Farmland values increased 13% in 2010 and could rise 7% in 2011

“There was a lot of uncertainty after the General Election as people slowly got used to coalition government, sat through an emergency budget and witnessed the harsh cuts of the comprehensive spending review. It was therefore hardly surprising that the farmland market remained flat, in fact it was rather encouraging that it managed to retain all of its value during this time.

“In the meantime commodity prices have continued to strengthen, with feed wheat approaching £200/t and oilseed rape hitting record contract highs. This should help push farmland values up in 2011 with demand increasing from both farmers and investors for the limited acreage of quality land for sale.

Tom Raynham, head of farm sales at Knight Frank, said:

Farmland prices are being driven by lack of supply and lack of quality. When good quality farms come on to the market they sell well, whether that be lifestyle quality or quality of land.”

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