Location key for land supply while demand remains sky-high

The land and farms market looks to be in full flow after a bumpy 2020, with agents saying demand remains sky-high from a variety of buyer types, and many vendors ready to take the plunge.

The Farmers Weekly land tracker, which records the number of acres advertised in the magazine, currently shows that the amount of land publicly marketed so far this year is up by 300% on 2020.

With the land market having ground to a halt during the first lockdown, this may seem self-explanatory.

See also: Find out average farmland prices where you live

However, some agents say this does not show the full picture.

In comparison with the more “normal” 2019, the acreage for sale is up by a sizeable 44%, but when put alongside the five-year average prior to the unusual pattern of 2020, this year’s cumulative figure is down 25%.

Downward trend

Clive Hopkins, head of farms and estates at Knight Frank, said the UK was generally experiencing a downward trend in availability of land coming to the market year-on-year.

“Owners are holding on to their land as a result of recent years’ backdrop of uncertainty, particularly surrounding Brexit,” he said.

“Now that we are no longer part of the EU and know the direction the industry is taking, that trend may reverse, although not immediately.

“In a few years’ time, when there’s been a period of understanding the market, we could then see more land begin to trade and a more predictable marketplace.”

In the short term, Knight Frank expects demand to continue to underpin the market in 2021 and potential vendors to sit tight, particularly while the cost of borrowing remains low, making business management more straightforward.

Greater volume needed

Fisher German, meanwhile, reflects Farmers Weekly’s land tracker results, having seen a 10-20%-plus increase in instructions in the first part of 2021 compared with last year, depending on location, and forecasting this to continue as the year progresses.

However, over the past three years, there has been a sharp decline in supply and the market is demanding greater volume to satisfy demand across almost every region, said head of farms agency Richard Gadd.

“We have launched a number of farms this year across the country, some viewed by well over 15 buying parties, and all motivated, many with cash funds,” he said.

“We have also advised a number of parties planning retirement sales over the next three to five years.

“Having demonstrated the significant values achieved for similar farms in their locality (both on the open market and privately) due to current undersupply, many are now looking to bring those sale plans forward as quickly as possible.”

Lifestyle buyers leading

Matthew Sudlow, head of estates and farm agency at Strutt & Parker, said his team was certainly seeing more land entering both the public and private market in 2021 compared with this time last year.

“The number of viewings for properties is also considerably higher year on year, showing the pent-up demand that has now been released,” he said.

“The types of buyers depend on location but in almost all regions they are being led by lifestyle choices, with rollover buyers also continuing to be active, many of whom are now up against a tighter timeframe.”

New entrants in terms of green investors – both private individuals and corporations – are also joining the market.

Mr Sudlow said Strutt & Parker was expecting prices to remain solid and had already experienced bidding wars this year, with two farms selling for in excess of their guide prices.