Market Trends

2017 has seen yet further polarisation in prices achieved for commercial farmland, and there are few signs that this gap is going to close any time soon.

In a year where the underlying sentiment has been inconsistency, definitively identifying trends is not easy, but there have been three recurring themes over the past twelve months:

1. Restricted Supply of Good Land. The amount of good quality, bare arable and root-cropping land advertised has fallen notably, but this has not necessarily meant strong bidding is assured when such land has become available in certain areas.
2. Buyers know what they like. Scale (investors still seem inclined to go for holdings over the 1,000-acre mark), location (the south and east remain very popular) and ‘angles’ for development are probably now the top three determinants of price, with land quality seemingly coming an increasingly distant fourth
3. Discretion has been key. There have been more off-market deals (both in terms of outright sales as well as land swaps) than has been the case for several years.

Market Highlights

There have been relatively few commercial arable farms of significant scale publicly advertised, and the general trend has been that properties have either sold well and quickly - such as Clopton Green (c. 1,200 acres with Hall, farmhouse, cottages and buildings in Suffolk guided at £14.75m) and Rectory Farm, Dry Drayton (320 acres with two dwellings and buildings in Cambridgeshire guided at £3.75m), whilst others have not fared so well.

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It should however be noted that in several cases, arable land has still ended up selling for at or around guide level, but this year it has taken anything up to ten months for the right buyer to come forward. The key determinant for farms of less than 500 acres invariably seems to be whether there is an appetite to bid amongst the neighbours, if they are keen things can heat up quickly, if not vendors should be prepared for a longer marketing campaign.

Probably the most notable sale of a livestock farm in East Anglia was the disposal of Woodlark Farms (a significant commercial pig unit set out across three let units in west Norfolk), which Bidwells launched in March and attracted strong competition from a wide variety of interested parties and sold for close to its £5.85m guide price.

We have also seen some significant off-market activity, with established (mainly privately owned) estates looking to restructure, address their exposure to borrowing or simply consolidate boundaries and this has manifested itself in various private transactions in the second half of the year.

2018 Predictions

2017 has ended with growing uncertainty as the UK’s shift away from direct subsidy support payments post-Brexit becomes more of a foreseeable reality, interest rates nudging up and a future ban on glyphosates appearing an inevitability (which will have significant ramifications for blackgrass control on more marginal land in the coming years)

Whilst this will probably lead to marginal land in less sought-after areas still struggling to sell, the market was so rarely tested in terms of large (i.e. 1,000-acre+), good quality farms in 2017 (for which we know investors remain enthusiastic) we suspect that if (and hopefully when) such holdings are advertised, they will still attract good interest.

At the same time, it would not be surprising to see a little more fluidity come into the market for smaller land parcels as vendors become more pragmatic on pricing where demand is less certain.