COMMERCIAL
Dairy farmers, on the other hand,
benefited from the recent slump in arable
prices – which are an input cost for them.
So over the second half of 2008 we saw
arable land values slumping – the East of
England was where prices fell most –
reflecting the falling wheat price, while the
price of pasture land remained almost
unchanged. RICS data shows arable falling
by nine per cent overall, while pasture land
Buyers, particularly prices were almost unchanged in 2008.
those with money on
FUNDAMENTALS FOR GROWTH
deposit at low interest
What’s next for the country market? Most
firms agree that farm prices are likely to
rates, are certainly
remain stable for the next couple of years.
Savills expects prices to fall five per cent in
starting to perceive the first half of ’09, but make up that short-
that property now
fall in the second half to end the year level. Also with Knight Frank, Biddlesden
Ian Bailey says that supply is likely to Park, Northants, offers 460 acres for a
offers value for
continue to be limited, while the long term cool £20m. For that the lucky purchaser
demand for food production is sure to rise. gets nine bedrooms, a coach house, a
money again.”
“You’ve got population increasing, you’ve farmhouse, a cottage, a flat, a stableyard,
got wealth increasing worldwide in the paddocks, coarse fishing and trout fishing
ANDREW SHIRLEY, KNIGHT FRANK long term – despite the current crisis - lakes and 106 acres of woodland.
you’ve got biofuels increasingly taking a
again; at the same time, input costs such as share of production, and a finite amount of income might not grow particularly quickly
diesel fuel are falling. Farmers are making land. The fundamentals are there for land – Ian Bailey believes that it’s farms in
profits, but profitability remains marginal. values to continue to increase, though not Eastern Europe and other emerging
Arable farmers need a wheat price of £120 at the rates we’ve seen before.” markets that offer the prospects of
to break even, according to Knight Frank’s There’s an argument that farmland increasing yield, and income, through
research, and they’re currently getting only represents one of the safest investments better management and investment in new
£110. Unless commodity prices ratchet up available during the current financial crisis. equipment – but it is likely to be stable.
significantly, low profitability will probably Like gold, it provides a hedge against When residential rents are falling and
limit further gains in land prices, at least in inflation – and it’s defensive, in that it’s companies are cutting dividends, farmland
the arable sector. likely to continue to generate income. That is becoming attractive investment.
Tracking the cost of farmland
Source: Knight Frank
£5,000
£5,100
£5,060
£4,796
£4,621
£4,673
£4,000
£4,129
£3,997
£3,708
£3,000
,
1
37 £3,459
£3,294
CRE
£3
A £2,988
£2,827
£2,937 £2,905
£2,873
£2,806
£2,865 £2,865
PER
£2,000
£2,500
£2,600
PRICE
£1,000
£0
2004 2005 2006 2007 2008 2009
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
68 JUNE 2009 PROPERTYdrum
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