Farmland values underpinned by appetite for commercial agriculture and environmental outcomes

Supply, while constrained in a historic context, is up on the past two years at the half-year point.

The interest in commercial units of scale runs alongside the continued demand for land suitable for environmental schemes from corporate investors and environmentally focused buyers.

This is driving up values for lower grade land in Scotland and, according to Savills’ data, particularly Wales this year.

The average value of prime arable and grade 3 grassland across GB is now around £9,420 and £6,100 per acre respectively.

In England, prime arable outperformed market averages recording a three per cent rise during Q2 versus an average 2.6 per cent. In Wales lower grade livestock land increased by an average 10.8%.

Emily Norton, head of Savills rural research, commented: “The evidence of keen investor appetite for large holdings launched to the market earlier this year suggest upbeat market sentiment for commercial agriculture notwithstanding the Ukraine crisis and the environmental narrative of recent years.”

Twenty-one per cent of farmland advertised during H1 2022 are farms over 1,000 acres, with the 10-year average running at 11 per cent of all farmland advertised.

The largest of these units are both over 4,000 acres located in Cambridgeshire and the East Riding of Yorkshire.

In other English regions supply remains constrained and often sales that have come forward are due to retirements which have been accelerated due to the huge impact on the cost of and risk of production due to the Ukraine crisis.

Alex Lawson, head of Savills rural agency, added: “A key feature of the market so far is the range and scale of property types available this year.

“This has led to a spread of potential buyers.

“Some have no past exposure to the agricultural sector and are attracted by the relatively safe investment opportunities presented by farmland at a time of considerable economic uncertainty.

“Demand for smaller farms is at unprecedented levels with a growing pool of buyers frustrated by the lack of opportunities.”

Evelyn Channing, head of rural agency in Scotland, said: “Buyers remain keen to take golden opportunities to acquire additional acres or to relocate to more productive land notwithstanding the repercussions of the war in Ukraine and the position regarding future agricultural support in Scotland that leave farmers with many unknowns to navigate.”