Another year of rising farmland prices in East Anglia
- Credit: Archant
Farmland values in and around Suffolk continued to climb during 2014, as unmet demand resulting from relatively low volumes of land coming to the market offset any impact of lower commodity prices on farming incomes.
A price of between £10,000 and £11,000 per acre became the benchmark for good quality arable land, continuing the record of growth seen since 2007.
Investors saw land as a relatively safe haven during the economic downturn and, while the growth in values is offering an opportunity to cash in, the supply of land remains historically low while demand has been assisted by tentative signs of a return of City money to the market.
A block of about 300 acres of light arable land at Lime Tree Farm, Blaxhall, near Woodbridge, including an irrigation licence for 90,000 cubic metres of water, was part of a flurry of agricultural properties marketed by the Ipswich office of Savills in the late spring.
Peter Start of Savills said the land, which was guided at £3million, attracted strong local interest although to two top bidders both came from further afield, with a sale being completed in September for in the region of £4m. “At the time it was a record price for bare land in Suffolk and probably is still now,” said Mr Start.
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Another bare land sale conducted by Savills involved 91 acres of good quality land at Toft Monks, near Beccles but just across the Norfolk border, which was guided at £9,000 per acre but sold for in excess of £11,000 an acre, amid strong local interest from a number of parties including both farmers and investors.
At the other end of Suffolk, this time just over the border into Essex, Savills marketed 98 acres of bare land at Belchamp St Paul, near Sudbury, with the vendor being an investor who bought the land only two years ago but was looking to capitalise on the strong growth in values since. The land was guided at £950,000 and was sold in September for £1.1million, to another investor.
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While, nationally, residential farms continued to be in short supply last year, Suffolk proved something of an exception, although not to such an extend as to undermine values.
Mr Start said a variety of reasons lay behind the residential farm sales handled by Savills in Suffolk during the year, including several retirements as well as a divorce and the separation of a farming partnership.
The increase in land values appeared to be encouraging people to sell on retirement, and make potentially tax-efficient gifts to their children, rather than waiting for agricultural property relief on inheritance in 20, 30 or more years’ time, he said, and this trend seemed likely to continue.
Among the residential farms sold by Savills during the year was Coblands Farm at Depden, near Bury St Edmunds, which included 157 acres of land, mainly arable but also including some wooodland, plus a mix of modern and traditional agricultural buildings and a five-bedroom barn conversion.
It achieved its guide price of £3m, with the purchaser being a new entrant to farming – essentially an “amenity buyer”, but planning to run it in-hand. The return of the amenity buyer was a notable feature of the market last year, added Mr Start, following several poor years for City bonuses.
Walcot Green Farm near Diss, which was jointly marketed by Savills and Durrants, consisted of 231 acres, including arable and meadowland, plus a period five-bedroom farmhouse, a three-bedroom cottage, an old granary with potential for residential conversion and a range of domestic and agricultural buildings.
It was guided at £3m and eventually sold in September to a local farmer for in excess of £3.5m, having attracted strong interest from a mix of farming and non-farming bidders.
White House Farm at Needham, near Harleston, in south Norfolk, was the only farm marketed by Savills during the year which was sold it lots rather than as a whole.
It extended to 125 acres, much of it good quality arable land but also including some marsh fronting the River Waveney, and included a period five-bedroom farmhouse, an adjoining three-bedroom cottage, a range of domestic and agricultural buildings and a 16,000 hen free range egg production unit. It was offered in five lots which attracted a mix of bids and resulted in the guide for the whole of £2m being exceeded by around 10%.
During the year, Savills also marketed Redgrave Park, near Diss, extending to 458 acres and featuring Capability Brown-conceived parkland, including a 44 acre lake and the setting for the now-demolished Redgrave Hall. It attracted substantial interest and a number of offers but was withdrawn from the market in October.
The largest residential farm sold by Savills on the open market during the year turned out to be Park Farm at Stanton, between Bury and Diss, which included 441 acres of land, a period four-bedroom farmhouse, a three-bedroom bungalow and extensive modern agricultural buildings.
It was marketed in June, on behalf of a family partnership looking to reorganisation and retirement, following a private offer of £5.5m. Mr Start said Savills advised that it would expect the property to achieve a price of £6m or more on the open market and, following national advertising, it was eventually sold for £6.5m.
Will Hargreaves, also from the Ipswich office of Savills, said that, overall, sales achieved by the firm in and around Suffolk during the year had seen an average price for arable land of around £11,000 per acre, rising to a high of around £14,000. With the supply of land looking likely to remain limited, at least during the first half of next year, pent-up demand should maintain prices in the short term, he said.
However, a “correction” in prices was likely to occur at some point in the future and next year’s General Election, combined with pressure on farm incomes through lower commodity prices, represented elements of uncertainty.
If Savills had the lion’s share of open market transactions in and around Suffolk during 2014, the Ipswich office of Strutt & Parker was able to claim probably the county’s single largest open market sale of the year.
Poslingford Hall Farm, on the south-facing slopes of the Stour Valley near Cavendish, which was brought to the market in May, totalled 832 acres, including 770 acres of arable land, an attractive farmhouse, a cottage and a range of farm buildings. It attracted substantial interest, both from local farmers and investors, and, after competitive bidding, sold for well above the initial guide price of £8.6m.
Giles Allen of Strutt & Parker said the market had continued to witness low levels of supply, although private transactions had become more prevalent than previously.
“Of the farmland brought to the open market, arable land values tended to average in excess of £10,000/acre with some, high quality farms making in excess of £12,000/acre, particularly light land with irrigation,” he said. “Interestingly, a two-tier market began to appear, with less accessible smaller blocks of land selling below this level.
“Strutt and Parker advised on a further 2,000 acres of farm land sales in 2014 in Suffolk and Essex. Prices fluctuated wildly between £9,000 and £15,000 per arable acre.
“Accessibility, rather than soil quality, was the key driver to these large variances. However, as the year draws to a close, £10,000/acre tends to be the benchmark for farmland land sales.”
Looking ahead, Mr Allen added: “Despite these record prices, there seems to be very little land being brought to the market in the early part of 2015. Whilst this persists, there will continue to be an upward pressure on land values, rather than downward.
“This surprises many people, as commodity prices and farming returns are lower than 12 months ago. It seems however, that the supply and demand imbalance has a stronger influence on the farmland market than farming returns.”
There was a similar view from Oliver Holloway of Clarke & Simpson in Framlingham. He said: “Prices have increased in the region of 10%, albeit the rate of growth has been slower through the second half of the year. Conversely, we have seen great fluctuations in farm gate prices since about 2007 with prices going from undulations to frantic peaks and troughs.
“Farmers have seen significant drops in commodity prices this year and which have affected all sectors; beef prices are 25% less than in the previous year and at harvest, a tonne of wheat was worth less than half what is was two years ago.
“Although there is no doubt that weakening commodity prices are likely to have an impact on farm profits and cash flows, the availability of farmland remains at a historic low and we are still seeing very strong demand for good quality blocks of land with the very best sales achieving in excess of £12,000 an acre.
“This was demonstrated with the marketing for sale of approximately 460 acres of land at Hacheston and Snape on behalf of our client Notcutts Ltd who were selling to allow further investment into their core gardening business.
“The land, which was mainly light in texture and had the benefit of a large irrigation licence, created considerable interest from both local and national buyers, resulting in competitive bidding and the guide price being exceeded by some margin.”
Mr Holloway added however: “What has become very apparent in the past few years with the increase in land prices is that the previous trend of strong demand for large farmhouses surrounded by a few hundred acres is changing and buyers of residential properties are more keen to acquire the house with, say, 20 acres rather than purchase all of the farmland.
“This has resulted in farms being ‘lotted’, with the land being sold away separately from the house. This trend has continued through 2014 and was the case with both Elm House Farm, Hoxne, which we sold in the spring and more recently with Rosery Farm, Great Bealings, a sale of which was agreed last month – in both cases, the land has been split away from the farmhouse.”