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This continued demand is supported by the number of new applicants registering to buy farmland, which were 16% up during the first quarter of this year compared with the same period of 2010, the latest analysis from Savills shows.
Its Savills Farmland Value Survey shows that high crop prices and the fundamentals of feeding the world’s population continue to drive the interest in farmland as an investment asset, especially at a time when the performance of many alternative assets is muted.
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Across Great Britain average grade three arable land recorded growth of 2.3% during the first quarter of 2011 with the Eastern regions of England recording the strongest growth in values of 5%.
Grade three arable land values in England rose by 2.7% during the first quarter of this year to average £5,700 per acre as the effects of a growing demand from many types of buyers and a squeeze on supply took hold.
‘This continued demand is supported by the number of new applicants registering to buy farmland, which increased by 16% during the first quarter of this year compared with 2010,’ said Ian Bailey head of Savills rural research.
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The market was strongest in East Anglia, where the number of acres available to buy was less than half of that for the same time last year. This pushed up average values by 5% to £6,553 per acre, but where competition was strongest values achieved highs of £8,500 per acre for prime arable land in the region.
‘Across England, arable land values continue to record the strongest levels of growth. The thirst for productive, well located farmland has led to record prices; several sales of substantial blocks have achieved over £10,000 per acre and prime arable land is regularly achieving over £8,000 per acre,’ explained Alex Lawson director of Savills.
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The analysis also shows that supply levels continued to fall with 14,000 acres of new stock available during the first quarter in England and just 1,612 acres in Scotland. However, in England this trend was not consistent across all regions. Volumes nearly halved in East Anglia and the South West of England, but were substantially higher in the East and West Midlands and the North of England, where a number of smaller farms rather than a few large blocks became available.
‘We are standing by our forecast for between 10% and 15% growth for average land values.
Our research shows supply was constrained during the first quarter of 2011 with a 22% reduction in the volume of farmland marketed across Great Britain, compared with the same period of 2010,’ said Bailey.
In England, just under 13,500 acres were publicly marketed during the first quarter of 2011, around 1,000 acres fewer than for the same period of last year. However, this pattern was not consistent across all the English regions. Increased supply, albeit from a low base, was recorded in the North of England, East and West Midlands, where supply increased by 78%, 63% and 58% respectively.
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Although representing a relatively small number of farms, this increase in activity was generally made up of more farms, rather than larger farms coming to market. In Scotland just over 1,600 acres were publicly marketed in the first quarter of 2011 compared with just under 4,600 acres in the same period of 2010, a decrease of 65%.
Anecdotal evidence suggests that privately marketed farms have already this year made up a fairly significant part of the total farmland market activity, particularly in the Eastern counties.
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Source: Property Wire