Suffolk: Bonanza year for Clarke & Simpson as farmland values go on rising
THERE’S no doubt that 2012 has been an exceptional year for Framlingham estate agents Clarke & Simpson and Suffolk’s farmland market.
While the residential property market continues to struggle against a recession-powered headwind, farmland prices have remained remarkably sheltered, possibly as a result of the ‘anti-cyclical’ nature of the farming sector.
But the land agents weren’t fully aware of the power of this counter-current until spring, when they were approached by no fewer than eight farmers, almost in one go, about the sale of their land and property. They knew this was going to be an extraordinary few months.
Six farms and two parcels of land in Suffolk went on the market simultaneously in a great farmland sale. The scale of the sales, in terms of the availability of farmland in Suffolk, was unprecedented, in recent history at least.
Earlier this year, the agents had acted for buyers in the purchase of the 2,300 acre Kelsale Hall Farms Estate, after the Mormon church decided to sell it on, and suddenly, as partner Oliver Holloway recalls, they were faced with a flood of farm sales through the spring and summer months. Some sold way beyond their guide price, as the sales attracted interest from both local and national buyers. For others, fortunes were more mixed, reflecting an anaemic residential property market, compared to a farmland market in the full flush of health, and the highly selective nature of the market.
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Overall, the agents estimate they were involved in the buying or selling of around 4,000 acres of land, both publicly, and through private sales.
As senior partner Christopher Clarke explains, it was a year like no other in his 40 year career. He doesn’t expect to see the phenomenon repeated next year, but believes a combination of factors, including deaths and retirals in farming families, converged to produce a unique set of circumstances.
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“As a firm we have never been involved in so many land transactions in a 12 month period and to be frank, neither have many land agents in Suffolk. So that has been very exciting. We have had a very strong demand, but it’s variable. What’s happened is the land market throughout the period we have found to be very strong.”
However, the house market at the upper level has been “tricky”, he explains, and this has made it more difficult to shift land which came with a large house. In these cases, it is sometimes necessary to split the land and home.
But what’s particularly remarkable about the sales this year has been the amount of land being exchanged.
“It’s very significant,” he says.
“The market for agricultural land is remaining strong. I’m asked all the time what’s to happen with the land market over the next two years, and the truth is, I don’t know,” he adds. “None of us know, but at this moment, there’s a very interesting ongoing demand and I don’t see it changing at the moment.”
Oliver adds: “Although the national trend shows that supply of farmland being marketed has fallen slightly through 2012, Suffolk has seen a significant increase in the number of farms coming to the market, particularly in the east of the county.
“It has been the largest number of farms that Clarke & Simpson have brought to the open market at any time and in fact the greatest number for any Suffolk agent for many years.”
Despite the difficult economic conditions in most sectors, farmland values have continued to buck the trend and land prices have continued to rise throughout 2012.
“It is quite incredible to think that it was only a few years ago that land prices were as little as �2,000 per acre,” says Oliver.
By contrast, these sales attracted prices of up to �8,000 to �9,000 per acre, and, in some cases, even more.
Although prime national arable land values are around �7,300 per acre, values in Suffolk are considerably stronger than this.
“A very quick sale was achieved on the 50 acres of land that we were selling at Rendham, and which was subject to a Farm Business Tenancy, and this sold in excess of �8,000 per acre,” explains Oliver.
“The 75 acres of bare arable land at Norton, near Bury St Edmunds, was sold in lots, but again averaged above the guide price.”
Meanwhile, the marketing of the farms generated “very good interest indeed” both locally and nationally, he says.
“We were not at all surprised that we received exceptional interest in Star House Farm, Thornham Magna, as we had already received many enquiries prior to marketing.
“The farm consisted of a highly productive and award winning commercial farm located in a superb setting in north Suffolk close to Eye. There was a period farmhouse, excellent range of modern farm buildings and farmland extending to about 312 acres. The farm carried a guide price of �3million but following competitive bidding from a number of parties, the farm sold significantly in excess of this figure.”
Meanwhile, interest in Oxbridge Farm, Fressingfield, near Eye, which came with farmhouse, buildings, was also strong.
The farm, complete with 61 acres, had been in the same family for three generations and although small by modern day standards, it created very good interest, says Oliver. Again, it sold “considerably above” its guide price of �900,000, following competitive bidding from nearby landowners.
Church Farm, at Chillesford, near Orford, was offered up for sale with a guide of �2m.
It comprised a Victorian farmhouse, buildings and 207 acres of which 145 acres were irrigated. The property generated interest from both farming and non farming parties, but was eventually sold to a neighbouring farmer.
“There is no doubt that the value of specialist vegetable crops and the need for irrigation is becoming increasingly important and this was shown by the interest that the farm created,” says Oliver.
White Hall at Debenham and Rookery Farm at Rendham, near Saxmundham, were both similar in that they consisted of very impressive and extensive farm houses surrounded by a good range of farm buildings and farm land. Clarke & Simpson was selling 329 acres with Rookery Farm, Rendham and 205 acres with White Hall, Debenham, but their road to sale proved complicated.
Despite both farms creating very good interest locally and nationally, it soon became apparent that although there was considerable demand for the farmland and buildings, there was less demand for the whole package.
“Investment buyers and farmers alike were concerned that a large proportion of the respective guide prices were tied up with the farmhouses,” explains Oliver.
“Prior to 2008, we were seeing very strong demand for residential farms where farmhouses were sold with an area of, say, 100-200 acres surrounding it. There is no doubt that the residential market has become much more selective and the weakening of the prime country house market has certainly had a negative impact on the residential/amenity farm market.”
However, following the separate lotting of the farmhouse and farmland at each farm, both land parcels then created competitive bidding, with the land changing hands well in excess of �8,000 per acre.
“Both blocks of farmland were bought by different investment purchasers and it is our view that whilst other use classes continue to struggle, this type of purchaser is going to continue being very much part of the market place,” says Oliver.
A very low base rate, significant capital taxation advantages on farmland and the relatively recent introduction of Entrepreneurs Relief, were all potential factors, he explains.
Now that the farmland has been sold away from the house, it is most likely that White Hall farmhouse, the adjoining buildings and 25 acres will be re-marketed in the spring of next year. Meanwhile, the family at Rookery Farm, Rendham, has decided to keep the house in the family.
It’s a similar story for Sycamore Farm, Bramford, near Ipswich, which remains on the market for sale despite a good number of viewings.
This again proves the selective nature of the residential/amenity farm market, Oliver believes.
The farm at Bramford, near Ipswich, is being offered jointly with Savills, with the guide price of �950,000 and comes with a Grade II Listed farmhouse, mature gardens, equestrian facilities, farm buildings and 34 acres.
Despite the mixed harvest this summer and subsequent very wet autumn, the buoyant commodity market is continuing to underpin strong farming confidence in the land sector.
“Wheat prices now average over �200 and are up some �70 per tonne than this time last year. The demand for farmland throughout the year has not faltered and, on the whole, farmers continue to be the highest proportion of traders within the market, generally with expansion being the main driver for those buying,” says Oliver.
“This was particularly evident with the sales of Star House Farm, Thornham Magna, Oxbridge Farm, Fressingfield and Church Farm, Chillesford.”
Beyond these high profile sales, where the farms have been marketed publicly, there continues to be a strong private market, where land is sold off market and where buyers seek private deals. Clarke & Simpson has been involved in a number of these this year.
“Buyers have mainly been investment style purchasers,” says Oliver. “This can often suit the vendor extremely well, particularly if they can continue farming the land on a Farm Business Tenancy or contract farming arrangement thereafter.
“Until recently, we were also seeing good demand from European buyers but demand from foreign investors has certainly dwindled as a direct result of the strengthening UK land prices.”
Woodland, often seen as the poor relation to agricultural land, selling for considerably lower and often half the price of arable land, has seen a similar resurgence to farmland. Woodland values have strengthened significantly in recent years and small parcels, which are often bought for amenity uses, are now equalling and sometimes exceeding the price of farmland.
This was certainly the case for the Framlingham agents which was involved in the auction sale of three areas of woodland earlier this year.
“We have recently launched onto the market approximately 106 acres of woodland at Barham, near Ipswich, and which has created good initial interest,” says Oliver.
The mature block of woodland has a guide price of �625,000.
“We await with interest and eager anticipation seeing how the market will develop next year, but 2012 has been a special and busy one for the Clarke & Simpson agricultural team,” says Oliver.