Why farmland costs the earth
Farmland continues to be an attractive proposition for both producers and investors, increasing in value against other options.
There are two basic considerations: no one is making any more of it; and with world populations growing fast, the benefits of owning land capable of food production are obvious. As a result farmland prices have increased enormously over the past 10 years, rising up to threefold in parts.
Prices of more than £6,000 an acre have become the norm, with no shortage of demand.
Mike Townsend, regional director of Savills, based in Exeter, explained: "Many farmers have watched their property's value double or even treble during the past few years and for some this represents a good opportunity to cash in on the strong market."
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In the Westcountry the past few years saw a proliferation of farmers buying up all or part of neighbouring holdings when they became available, to increase the size and potential of their farms. Agents cottoned on to this requirement, realising that lotting farms into handy-sized plots would allow existing neighbours the chance to buy and expand, and vendors found they could garner more from their sales this way.
This year, though, London investors and overseas purchasers have returned to the market in strength, seeing farmland as a safe haven for investments – with potential buyers from cash-strapped eurozone countries like Greece and Italy among the bidders, seeking safety for capital.
Buyers from the City, and from the Home Counties where land is selling at a premium, have become a major factor.
And while five years ago the trend was for farms with substantial farmhouses to be sold as a single lot, more recently bare land without buildings has proved more attractive for quicker sales.
Generally, the eastern part of the region has seen outside purchasers becoming involved, with the western part (west of Exeter) retaining a healthy sales record to local and domestic buyers.
"We're still selling predominately to farmer buyers, and the situation hasn't changed for the past 18 months," said Jackie Chegwyn of agents Kivells, in Holsworthy. "It's certainly true that overseas buyers are purchasing land upcountry for investment – and that could well be heading this way," he added.
Moving eastwards, James Baker, of Strutt & Parker in Exeter, puts purchasers from London and Home Counties at the top of his list of buyers.
"From my perspective, the most likely order of land and farm buyers are London and the Home Counties first, then the local farmers and then the overseas buyers," he said.
He added: "We are still experiencing demand for bare land and commercial farms from overseas buyers, particularly, in our case, from Singapore.
"But local farmers from within 10 miles of the farm or parcel of land being sold can end up being the better buyers."
"Provided funding is achievable, local farmers are quite often prepared to bid strongly for land which may not come up for sale again in their lifetime – and seize the opportunity."