Knight Frank announces that demand for farmland rises by 15%

“The final three months of 2005 saw demand levels for farms and farmland rise by around 15% year on year. Prices held firm and rose in the majority of cases, aided by supply shortages continuing from the third quarter of the year. Interest was especially notable amongst super-wealthy lifestyle buyers and City employees looking to spend record end-of-year bonuses.”

Knight Frank (http://www.knightfrank.co.uk ) reports that “Both the volume of sales and the area of land traded rose slightly but concerns over the Single Payment Scheme (SPS), and worries over delays in payments, continued to suppress supply.”

“Lifestyle buyers retain a significant presence within the market. Land featuring a house, or land with the potential for development, located within the South East, South West and the M4 corridor was received particularly well by the market.”

Prices for farmland and estates UK (http://www.knightfrank.co.uk/WebUk/residential/farmsEstates/default.aspx ) rose by 2.1% during the final quarter of 2005, although the annualised rate was minus 2.4% following price falls in the first nine months of the year. The average price for bareland rose by around 2.0% in the final quarter – with high demand from locations in the South East and the South West in particular recording more substantial price increases.

The average price for farmland ended 2005 at £9,828 per hectare (£3,977 per acre) depending upon location and characteristics. The average price for bareland was £8,040 per hectare (£3,254 per acre).

Average yield, rental growth and capital value growth on let farmland remained relatively unchanged throughout the final quarter of 2005.
Sales activity rose by around 8% during the final three months of 2005 driven in part by the super wealthy and city workers looking for ways to spend record city bonuses.

The total area of land traded also increased marginally, by around 7%. However, in spite of this rise, shortages can still be observed, particularly in high demand areas.

Land availability continues to be an acute problem within the farmland market with a majority of agents describing supply conditions as ‘poor’. Concern and confusion over SPS entitlements and fears about late payments, combined with a general slowing of the UK housing market, have constrained the release of land.

Demand has risen by around 15% with increases being higher still in Hereford, the Cotswolds, Oxfordshire, Warwickshire and Hampshire. Farmland and estates UK (http://www.knightfrank.co.uk/WebUk/residential/farmsEstates/default.aspx ) experienced higher demand compared to bareland during Q4 2005. In terms of specific types of land, land with a property, land with planning permission and equestrian land were in highest demand. Pasture and arable land attracted a fair degree of interest whilst woodland received the lowest level of attention.

About Knight Frank
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For further information: http://www.knightfrank.co.uk
Or contact
Olivia Smith
Associate, Residential Press Manager,
Knight Frank LLP,
20 Hanover Square,
London,W1S 1HZ

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