Farmland values rise on back of positive demand

Growth slowed slightly in the second quarter of the year with prices increasing by just 1% however Knight Frank predict further growth in values of 3% over the next 12 months.

James Denne, Head of Farms Sales in Scotland, comments:  “People are still positive about farmland, but they are being slightly cautious at the moment. North of the border we tend not to see as much activity from investors as in England. Most of our buyers are farmers and they take a fairly canny view when it comes to buying more land. Anything that is too fully priced runs the risk of attracting limited interest.

“I think if investors were aware of the quality of some of the arable land here and the strong demand to rent or contract extra ground they might be looking further north. Every time I put a farm on the market I always get plenty of phone calls from neighbouring farmers or contractors looking to spread their fixed costs.”

Farms that are correctly priced are attracting a lot of interest. “Despite the weather, we had seven viewings the week after we recently launched Upper Huntlywood, a 690-acre Borders arable and stock farm priced at around £4,000/acre for the land,” James adds.

A 316-acre stock farm in Dumfries and Galloway has also just attracted offers over its guide price, despite the continued absence of buyers from both sides of the Irish border who were significant purchasers of farms in the west of Scotland before the credit crunch curtailed their spending power.

Michael Ireland, Head of Rural Valuations in Scotland, who has valued a number of wind farms.

“We are often asked if the increase in the number of upland wind farms is having an impact on values. But so far there is no evidence that this is happening.”

“At the moment it is woodland not wind that is driving demand for Scottish hill land. Uncertainty over future renewable energy payments and the time taken to get planning permission means there is very limited speculative demand for land for wind turbines.

“By contrast, there is still a lot of demand for hill land suitable for tree planting, either for commercial forestry or to re-establish native woodland habitats. An added bonus is the ability to sell carbon credits that organisations can use to offset their CO2 emissions.”

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