Farmland proves a sound investment according to Knight Frank

The key highlights of the latest research from Knight Frank are:

• English farmland values rose by 3.2% in the third quarter of 2009, the second successive quarterly increase
• The average price of farmland is now £4973/acre, just £125/acre below its summer 2008 peak
• Prices, however, remain variable with the best land achieving a significant premium
• Availability of farmland remains limited, helping to boost values
• Over the past 15 years farmland has outperformed the FTSE 100 share index

Andrew Shirley, head of rural land research at Knight Frank, commented: ‘The farmland market has now regained much of the ground it lost after the credit crunch when sales virtually ground to a halt. Prices have now risen by over 3% in each of the past two quarters and are now just 2.5% below their June 2008 peak. Over the past 15 years farmland has performed significantly better than residential property and the FTSE 100 index.

“Although commodity prices have fallen back significantly from last year’s record highs, there seems to be a feeling that agriculture in the UK has a long-term future and farmers, who make up 57% of buyers, are keen to buy more land. We are also seeing tentative signs of a return of the lifestyle buyer (25% of purchasers) as the housing market starts to pick up again.

“Overseas buyers (10% of purchasers) who were significant players prior to the credit crunch, especially the Irish and Danish, have yet to return to the market in numbers, despite the weakness of Sterling against the Euro, which makes English land good value for them. We have also seen little real activity yet from investors, although a number of funds are actively exploring the opportunities available.”