Farmland is an attractive investment

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by Kay Murchie

According to estate agents Knight Frank, farmland prices have risen by 32% so far this year and nearly 10% in the 3 months to September.

The increases are all the more prominent following the recent foot & mouth and blue tongue outbreaks in England, which have reduced yields on land. A disproportion in supply and demand in the market has offset this and driven prices higher.

At least 2.5% more acres were sold in the 3 months to September during 2007 than in the same period during 2006.
Demand for country estates has been strong in areas west of London. Residential prices in some top-end areas of London have been rising by 40% annually, creating a large amount of equity for investment contributing significantly to additional demand and underpinning price competition.

Investing money in land is nothing new with the Church of England, the Crown Estates and many Oxbridge colleges traditionally investing in farms. Furthermore, the city began to generate interest in the 1990s but in the last decade, farmland has been disregarded, mainly because values have been stationary.

According to Knight Frank, 15% of land was purchased by overseas buyers, with Dutch, Irish and Scandinavian buyers among the biggest buyers.

An acre of farmland now costs £4,178, up from £3,137 twelve months ago. Many would argue that fields are a better investment than residential or commercial property.