Global farmland market: Values and opportunities overseas

Land values are rising fast in many regions around the world due to low supply, high demand, rising commodity prices and an increased focus on food production.

The UK is no exception to this, and this may encourage investors to look further afield for new ventures or to expand existing businesses at a lower cost.

However, purchasing in different countries can pose various risks and seeking professional advice is a must.

Farmers Weekly asked agents Brown & Co and Knight Frank what the market was like for farmland around the world and what notable agricultural properties are currently on the market.

See also: Find out average farmland prices where you live

High prices to remain

Adam Oliver, partner at Brown & Co, says land prices have been firming around the globe for some time, and the current Russia-Ukraine conflict has simply added fuel to the fire.

“We have seen an average 21% increase in land values over the last 18 months across the US, Poland, Romania, Uruguay, and Australia. In our opinion, the mix of supply side challenges, 40-year inflation highs plus the prospects of agriculture being part of the carbon solution, rather than part of the problem, mean this upward trajectory is not going away any time soon,” said Mr Oliver.

Will Matthews, head of farms and estates at Knight Frank, is not expecting the land market to soften in the short term and suggests that with less land becoming available, more environmental investors looking to buy and food security back on the agenda, values are likely to go in only one direction.

“There is such a shortage of stock at the moment and everything that is trading currently is trading well,” he said.

“There is still a lot of pressure on the market from farmers with rollover money from development, tax-driven investors and lots of big landowners looking to get bigger.

Then, when you throw into the mix rewilders and those looking at environmental enhancement, the land market has never been hotter.”

There are reports of land in some regions of Belgium trading at about €30,000/acre (£25,900), according to Mr Matthews.

Eurostat data shows that average land value in Belgium in 2014 was €15,600/acre (£13,300).

United States

In the US corn belt, “$20,000 is the new $10,000”, according to Brown & Co.

Land prices in the Midwest had stood at about $10,000/acre (£8,300) for the past few years, but land has been sold throughout spring 2022 for about $20,000/acre (£16,500).

Mr Oliver says the factors driving land values in the US are similar to elsewhere, but are slightly exaggerated in the Midwest. Commodity prices have effectively doubled, driving competition for land and pushing up rents.

Interest rates are increasing from historically low levels, which means buyers are wanting to lock in long-term low rates now before they rise further.

Inflation is currently at a 40-year high and buyers often cite strong land performance in times of high inflation as one of the driving factors for entering the market.

As a result, there has been a 38% increase in land prices since 2020, according to Brown & Co data.

Uruguay

The expansion of the port in the capital, Montevideo, is increasing opportunities for international trade within South America.

In recent years, the land market in Uruguay has softened due to poor commodity prices and investors from Argentina seeking to exit, according to Brown & Co.

However, land prices have risen 11% during the past year in the south of the country for double cropping land, to more than £2,500/acre.

Australia

During 2021, land prices in Australia increased on average by 20%. Low interest rates, strong prices for commodities and favourable seasonal conditions are all helping to support the market.

Figures from Brown & Co show significant regional variation in land prices. Victoria saw an increase of 30% in 2021 to about £2,400/acre. Prices in Western Australia increased by 36% in 2021 to £957/acre.

In the Northern Territory, land values fell by 19% to just £115/acre. However, this figure is slightly skewed by recent sales of large cattle stations, while smaller properties still attract higher values.

South Africa

Knight Frank is selling a 175-acre citrus and table grape farm close to Stellenbosch in South Africa.

It includes a five-bedroom house, four cottages and a range of buildings and is currently on the market for R80m (£4.08m).

Poland

Land prices in Poland have increased by 6% over the last 18 months to more than £5,400/acre. Tight supply and high commodity prices are driving strong interest from farmers and helping to support markets.

Mr Oliver said: “The market is increasingly mature and is now driven entirely by farmer-to-farmer transactions, with serious competition for land.”

Brown & Co is selling a 2,700-acre farming business with a guide price of £9m. The business is being sold as a going concern and includes all machinery and storage facilities.

The ringfenced, commercial unit is currently cropping wheat, oilseed rape and oats.

Kenya

A farm in Naivasha, about 50 miles north-west of Nairobi, is being sold by Knight Frank with an asking price of £3.79m.

The land covers 70 acres which is currently made up of eucalyptus, acacia and grevillea plants and 45 acres of Rhodes grass, producing two crops of hay annually, as well as two dwellings.

Romania

After a period of lower prices in 2020 and into 2021, the land market in Romania has begun to firm, with land values increasing 18% to about £2,400/acre in the Calarasi region in the South East.

Larger blocks of good quality, registered land have been increasing at the fastest pace, according to Brown & Co.

The agent is bringing two farms in Romania to the market in September.

The first is a 2,500-acre operation, made up of 370 acres of freehold land and about 2,100 acres of leased land. The guide price is €3.5m (£3.01m) including silos, drying and handling facilities, storage and machinery.

The second listing is a 10,000-acre holding which currently crops wheat, barley, maize, oilseed rape and sunflowers.

The land is also in the South East, about 20 miles from the Black Sea port of Constanta, and has a guide price of €30m (£25.85m).

Italy

A 380-acre holding made up of pasture, woodland, olive groves and vineyards is being marketed by Knight Frank.

The property, near Radda in Chianti, in Tuscany, is price on application and includes a villa, farmhouse, and further outbuildings.