Land is leading the way
We are all aware that we are in difficult economic times and the dizzy heights of the property market in 2007 are barely worth considering, or referring back to, as these are history and we must look forward.
However, it is interesting to note that the number of property transactions has remained fairly constant since 2008 at about 50% of the levels before that period so only half of us either can, or wish to, sell or buy.
Undoubtedly, the lack of supply has helped to support the residential property market, and while values have recovered, they remain fairly static and are, as always, dependant upon purchaser and vendor confidence, as well as the availability of finance.
With the economy flat-lining, it appears that we are likely to continue in similar market conditions for some time to come. So moves are "relative" with no major ups or downs on the horizon to encourage either speed or delay of action. Most have now taken this on board and acceptance and realism allows results.
Interestingly, land has bucked the residential property trend. It is tempting to say that land has shown continual increases in value despite the difficult prevailing economic conditions but the reality is that it is probably because of the difficult economic situation and the resulting turbulent trading conditions. Land has, in short, been seen as a safe haven for investment.
The rising land prices have resulted in often fierce competition between farmers and investors. Entrepreneurs have often been shying from other investment types because of the uncertain world markets thus only adding to the persistent growth in land values.
The Royal Institution of Chartered Surveyors (RICS) said: "Farmland continues to be viewed as recession proof and we are seeing UK and overseas investors purchasing commercial farms as an alternative form of investment which is outperforming other markets. These investors are competing with farmers and resulting in prices remaining high."
Simultaneously, the world's population is forecast to continue to rise exponentially with more than 9 billion mouths to feed by 2050. Taking into account that no more land is being made the pressure on the ex isting can only increase.
This is further compounded by the growing appetite for meat among the emerging nations. With up to 13 kilos of grain needed to produce one kilo of beef, it is ramping up demand for high quality land ever more.
Current landowners have recognised this trend and have been holding onto the asset, resulting in a 41% drop in land for sale in 2012, the lowest since 1993. Which leaves us asking, what can we expect in the next decade?
Overall, the medium term capital value prospects for UK farmland are very positive, despite the higher yielding alternatives. This is partly due to the lower risk attributed to investing in land.
The South West too has reflected this trend with an increasing demand for investment opportunities. We have found more clients are seeking such an investment with notable auction successes over the last few weeks have included 60 acres near Payhembury, Honiton selling for £545,000 (£9000/acre); 54 acres of arable grade land including some farm buildings near Rull, Whimple, selling under the hammer for £555,000 (£10,278/acre) and 38.95 acres at Upham Farm, near Farringdon, Exeter, selling for £440,000 (£11,300/acre). These three sales occurred in the Exeter/East Devon area where prices are often noticeably higher than in other areas and in one case the purchaser was an investor; in another, the sale of the land for development helped finance the purchase, and the third saw local businessmen all with farming interest compete for a rare opportunity in their locality.
Other auction successes have included Westworthy land and buildings (53.14 acres) at North Tawton, which sold under the hammer for £345,000 (£6,500/acre) , and a private sale of 75 acres in the West Devon area for approaching £6,500/acre – enough to prevent the land from coming onto the open market.
Forthcoming auctions include over 95 acres of arable and pasture land at Stoke Post on Exeter's northern fringes. Lying within a ring fence, this mixed parcel of land is guided at £600,000 for auction on September 21.
On the same day, 101 acres of south facing, free-draining arable ground at Roborough, near Winkleigh is being auctioned. Forming part of Lower Whitsleigh Farm, Lot one extends to 54 acres and Lot two to 46.75 acres at guide prices of £270,000 and £185,000 respectively.