Agricultural land tipped to keep rising in value

THE fact that agriculture has escaped the worst effects of the recession and that farmland has risen sharply in value since the rest of the economy went on a downward slide, has left one land agent predicting the price of land will continue to rise, albeit slightly, in 2010.

Speaking at his company's spring review of land values, Simon Brown of CKD Galbraith said farmers, their agents and advisors had now become used to the fact that arable land trades at or above the 6,000 per acre mark and permanent grassland is valued at up to 2,500 per acre.

Added to that, the strong demand for forestry in upland areas helped put a base in that sector of the market. "As we go forward in 2010, I am confident that we will see a slight rise in the value of agricultural land."

Brown qualified his optimism by adding that because of uncertainty hanging over some farm commodities he expected to see some tailing off in the premiums being paid for some land.

Otherwise, he said, many of the factors that had helped drive up the price of land were still in place. There would continue to be a shortage of land on the market, he stated. Also, the "neighbouring farmer" had been an important bidder in many of the farms that had come up for sale and he expected this to continue. The easier access to capital for land was also a plus as far as keeping the price of land at its current levels.

Brown then referred to people who may have no interest in farming but who see investment in farm land in these difficult times as a wonderful investment.

Looking at the tenanted sector, his colleague, Chris Addison-Scott predicted that rents would continue to show significant increases of between 20 and 30 per cent where reviews had not taken place for many years.

"However, farms where there has been rent reviews undertaken on a more regular basis will show a much smaller, if any, increase."

Addison-Scott who came in for some flak from the Scottish Tenant Farmers Association late last year over some rent rises, declared the vast majority of rents were reviewed amicably between landlords, their agents and the tenants and their agents.

"CKD Galbraith has now carried out over 100 farm rent reviews since 2008, resulting in substantial rental increases due mainly to the fact that these rents have not been reviewed, in some cases, for 15 years."