Demand from investors pushing up agricultural land prices

Posted 18/02/2010

An increasing number of people are choosing to buy agricultural land as an investment, according to the Royal Institution of Chartered Surveyors (Rics).

The body’s latest rural market survey concluded that the average price of farmland climbed by four per cent to £12,715 per hectare in the second half of 2009.

For deals involving a residential property, the average value increased by 7.8 per cent to £16,381 per hectare.

The majority of surveyors reported a rise in demand for commercial farmland during the period, something which Rics said demonstrated the increasing attractiveness of farmland as an asset class.

Sue Steer, Rics spokesperson, said: “It is farmers looking to expand and investors who see it as a viable business or investment class that are fuelling the rise in demand.”

She added that with land for sale in short supply and conditions within the agricultural sector improving, the value of farmland is likely to rise further in 2010.

Brown & Co land agent Robert Fairey recently said Inheritance Tax Relief was an important factor in driving demand for farmland in East Anglia.

He also predicted that demand for agricultural land in the region would continue to rise in the first half of 2010, while supply would remain restricted.