English farmland market review 1q2013

All figures in this review, from Smiths Gore’s research

department, are from our comprehensive database of

all sales of publicly marketed farmland in England and Scotland over 50 acres; they exclude sales

where the residential value of the sale is greater than 50% of the total. Therefore figures are

transaction-based, not based on opinion like other firms’, apart from the Scottish and regional

values which are from our regional farm agents.

Is the market waking up as most land for sale for five years?Values stable but we will not really know until the second quarter

Review of the English and Scottish farmland market January – March 2013

Market Intelligence Report

smithsgore.co.uk

Key points:

• 17,800 acres were marketed in England, the most in the last five years, so the low supply might finally be increasing

•We expect around 100,000 acres for sale again as there are few forced sales and landowners wait to see the detail of the CAP reform

•The average price remained at £9,100 per acre in England and £5,930 in Scotland

•Both bare and equipped land values are at historic high levels

•For 2013, our statistical model of the market estimates that values will rise 7%. However, this may be bullish and the rise could be lower. We expect bare land prices to increase faster than equipped land

More land for sale

17,800 acres were marketed in England in 1Q2013, the highest amount in the last five years, which suggests that the low supply of land for sale might finally be increasing.

In Scotland, only 9 properties totalling 1,400 acres were marketed.

2012 had the lowest amount of land marketed ever, at 90,500 acres in England; there had never been less than 100,000 acres marketed before.

The outlook for 2013 is already better but we don’t still don’t expect much more than around 100,000 acres for sale as there is not a significant number of sales being readied for marketing in the spring.

In Scotland, 39,500 acres were marketed in 2012 and again, we don’t expect much more this year.

North West – Simon Waller

No change in values from last quarter. There is still interest from buyers but little for them to buy; we hope to have a few new farms for sale as their current owners retire. Having a high street presence in Clitheroe has certainly raised our profile amongst the farming community. We sold Cumbria County Council’s 98 acres East Park Farm, near Carlisle, to a local farmer at almost £17,500 per acre - but this is exceptional! We also sold the Council’s 87 acre Beech Farm to the tenant. Farms and the farmland market in Cumbria remain strong as the recent sales prove and shows that good quality land in the right location is still as popular as ever.

1Q2013 1Q2012 1Q2011Bare arable (£/ac) £6,000 £6,000 £6,000Bare pasture (£/ac) £5,500 £5,500 £5,500Equipped (£/ac) £6,900 £6,800 £6,000Number of farms for sale 12 9 14Total area for sale (ac) 1,327 1,611 1,819

South West – Simon DerbyDespite a number of new farms coming to the market, supply this year appears to be down as predicted. Prices have remained at the levels reported at the beginning of the year, however, once sales results are known we will get a better of idea of where land values are. Off-market sales continue to be agreed on bare land with agreed prices in excess of average values for the region.


Land for sale in England

(acres)

1Q20131Q2012

(% change in last 12 months)

Bare land 5,5003,800(43%)

Equipped farms

12,30012,400

(0%)

All land 17,80016,200

(10%)

West Midlands – Ed de LisleWe expect business as usual here. Although there have been no notable sales in the first quarter, the market will become much more active after Easter and we have a number of properties lined up in anticipation.


South Central – Giles Wordsworth

1Q2013 1Q2012 1Q2011Bare arable (£/ac) £7,750 – – Bare pasture (£/ac) £6,000 – –Equipped (£/ac) £10,000 – –Number of farms for sale 11 13 18Total area for sale (ac) 1,833 1,566 2,174

Sales confirm that quality remains the key driver to achieving premium prices, which can vary significantly from one part of a county to another - there is prime, secondary and tertiary land in all counties. It is not certain how the poor harvest and poor spring will affect farmers’ demand for land; logically, it should take some buyers out of the market as they had a more difficult financial year but many will still go for land if an once-in-a-generation opportunity arises.

Land for sale in England

(number of farms for sale)

1Q20131Q2012

(% change inlast 12 months)

Bare land 4429

(52%)

Equipped farms

6759

(14%)

All land 11188

(26%)

Smiths Gore offices

Area of English farmland marketed

Scotland – John Coleman

There has been little activity in the Scottish market and with so much snow on the ground we will have a later start than normal. There has been one significant private deal at Kincaple Farm near St Andrews, where a consortium of local buyers missed out to an Irish purchaser with Capital Gains Tax roll-over funds. We expect there will be a shortage of acres offered for sale this year, which will put further pressure on prices.


NB The regional bare and equipped values quoted are based on the opinions of our farm agents; the data on number and acreage for sale from our comprehensive database of all sales of publicly marketed farmland in England over 50 acres; they exclude sales where the residential value of the sale is greater than 50% of the total.

All data is for 1Q.

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Acres

Area of farmland marketed in EnglandSource: Smiths Gore Research

Bare land Equipped land All land

06Q1 07Q1 08Q1 09Q1 10Q1 11Q1 12Q1 13Q10

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Acres


Both bare and equipped land values remain at historic high levels

Values appear stable but we will only be able to judge this in the second quarter, once more land has been marketed in what is usually the busiest quarter of the year.

The average value of English farmland remains at £9,100 per acre. It has risen by 5% since the start of 2012, compared with an increase of 14% during 2011.

Bare land values remain at £7,000 per acre, up 17% over 2012.

Yorkshire and Humber – William DouglasThere continue to be some stand out results but these are many associated with hotspots. The general market has been slow to get going with little launched to truly test buyers’ mettle. Confidence is waning with some farmers as the appalling autumn continued into a snow bound spring. We will test market interest for livestock farms with a 380 acre equipped mixed farm in North Yorkshire. With a good house, holiday cottages and useful range of buildings, we expect it to appeal to a variety of buyers.


North East – Iain WelshStill a dearth of activity in the market with very few notable farms launched this Spring. Prices remain firm with what little land has been offered and traded in the open market. As ever, location, quality and local demand continue to dictate prices with some significant variations in the region. We have some large bare land sales in the pipeline with smaller units due to be launched shortly. We await with interest how the market reacts to the launch of Alcan Farms’ agricultural portfolio of 4,000 acres near Morpeth in Northumberland.

1Q2013 1Q2012 1Q2011Bare arable (£/ac) £6,000 £5,800 £5,800Bare pasture (£/ac) £4,250 £4,000 £4,000Equipped (£/ac) £ 7,500 £7,500 £7,500Number of farms for sale 4 5 2Total area for sale (ac) 756 2,089 186

East Midlands – Luke HumphriesValues have not changed since the end of last year but very little land has been marketed. Time will tell to what extent confidence has been hit by the difficult weather conditions faced over the winter and what this effect will have on prices as we get further into 2013. With the exception of some significant off-market deals, there is still a lack of supply so price volatility is expected to remain low.


East of England – Sam TydemanPrices have not changed since the end of 2012 and there has been nothing offered in the immediate area this Spring so far. Some farmer demand may be tempered by last year’s harvest and the prospect of another poor year on heavy land as a result of last year’s effects and terrible weather so far this year. Everything is going to be very late. As we know, however, farmers don’t like to let the opportunity to buy adjacent land pass them by! We are selling Longholes Stud, one of Newmarket’s oldest studs which has stabling for 50 horses.


South East – William Banham

Stationary prices and a largely stationary market. So no change there! Only two farms over 250 acres were advertised and most sales have been of smallish (50-100 acre) blocks of bare land.

1Q2013 1Q2012 1Q2011Bare arable (£/ac) £7,500 £7,000 £5,500Bare pasture (£/ac) £6,000 £5,500 £5,250Equipped (£/ac) £9,500 £8,500 £7,250Number of farms for sale 7 6 3Total area for sale (ac) 1,226 1,127 952

Average price in England

(£/ac)

1Q2013

(% change since

4Q2012)

4Q2012

1Q2011

(% change in last 12 months)

Bare land £7,000(+0%)

£7,000 £6,000 (+17%)

Equipped farms

£9,700(+0%)

£9,700 £9,400 (+3%)

All land £9,100(+0%)

£9,100 £8,800 (+4%)

Smiths Gore offices

English farmland values

NB The regional bare and equipped values quoted are based on the opinions of our farm agents; the data on number and acreage for sale from our comprehensive database of all sales of publicly marketed farmland in England over 50 acres; they exclude sales where the residential value of the sale is greater than 50% of the total.

All data is for 1Q.

In Scotland, prices are also stable following rises for bare arable and equipped farms in 2012.

As we said in our previous quarterly update, the market may have reached a natural threshold in terms of land values for equipped land but this will only be tested once more land becomes available in the Spring and Summer.

As throughout 2012, the market fundamentals that are driving prices up have not changed – the amount of land to buy is still very small and demand from farmers, in most places, remains strong.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

07Q1 07Q2 07Q3 07Q4 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2 09Q3 09Q4 10Q1 10Q2 10Q3 10Q4 11Q1 11Q2 11Q3 11Q4 12Q1 12Q2 12Q3 12Q4

£/ac

Farmland values in England (£/ac)Source: Smiths Gore Research


01,000

2,000

3,000

4,0005,000

6,000

7,0008,000

9,000

10,000

07Q1 08Q1 09Q1 10Q1 11Q1 12Q1


£/ac

13Q1

How the farmland market has performed during the recessionLand has been one of best performing assets. Farmland values have risen by 22% since mid 2008, from £7,400 per acre to £9,100 per acre now.

There are a number of reasons it has performed so well. Its value is driven by different factors than assets like shares or commercial property or houses. The high commodity prices since 2008 have driven farm incomes up, making more farmers want to expand. This demand, coupled with increased demand from non-farmer buyers including investors, has chased fewer and fewer acres for sale.

All land is not the same and the biggest increases in value have been for bare land, which has risen 70% from £4,100 per acre to £7,000.

Our forecasts for 2013Average value of English farmland up +7%, according to our statistical model of market. However, this may be bullish and the rise could be lower. We expect bare land prices to increase faster than equipped land.

Around 100,000 acres for sale again as there are few forced sales and landowners wait to see the detail of the CAP reform. The main risk to this forecast is landowners selling at what they believe to be the top of the market.

ContactsOur regional farm agents would be pleased to give you more information about the land market in your region or county. Please do not hesitate to contact them:

Great Britain

National Head of Farm Agency Giles Wordsworth London 0207 409 9490

England Giles Wordsworth London 0207 409 9490 Sam Tydeman Newmarket 01638 676743

North East Iain Welsh Darlington 01325 370500North West Simon Waller Clitheroe 01200 411052Yorkshire and Humber William Douglas York 01904 756303West Midlands Ed de Lisle Lichfield 01543 266407East Midlands Luke Humphries Peterborough 01733 559322East of England Sam Tydeman Newmarket 01638 676743South East William Banham Maidstone 01732 879058South Central Giles Wordsworth Oxford 01865 733302 Harry St John Oxford 01865 733304South West Simon Derby Taunton 01823 445036 Toby Perry Exeter 01392 294891

Scotland

Head of Farms and Estates Agency Team John Coleman Edinburgh 0131 344 0881

If you have any questions about this review, please contact

Gerald FitzGeraldHead of Property Investment and Valuationst 0207 4099492e [email protected]

Dr Jason Beedell Head of Research t 01733 866562 e [email protected]

English farmland market review 1q2013

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