Land investment in UK enticing as farmland value rises 3% in Q2 2014

For Nigerian overseas investors, the real estate market in UK is the next destination as the upward trend of land values continues with the average value of farmland in the region rising 3 percent in the second quarter of 2014, to £7,517 per acre.

Shelly Ford, an investment analyst, reports in Property Offers—an online property publication—that the rise in farmland values compares favourably with gold in terms of returns on investment.

Knight Frank  notes that, during the past year, values increased on average by 17 percent, and over the past 10 years by 208 percent, adding that compared to gold, one of the hottest assets during this period,  the value of which has gone up by 254 percent, it’s clear that land is undoubtedly a sound investment.

Spurred on by growing interest from foreign investors and pension funds, English farmland values continued to rise in the second quarter. Frank Knight says in its index that average values for farmland in England rose by 3 percent in the second quarter to £7,515 per acre.

It added that availability remains limited, with 17 percent fewer landowners advertising land publicly than the previous year, but demand continues to be buoyant, particularly from investors.

“Potentially, there could be more pension fund and institutional buyers in the market,” says Tom Raynham, head of Knight Frank’s agricultural investment team. “There are some good deals happening off market.

“Investors’ knowledge of farming systems is growing. They are looking for opportunities where they can increase agricultural productivity and returns, rather than just purchasing land let under long-term agricultural tenancies, which has been the traditional investment target.”

Although the overall trend is up, there are still large variations across the country, says James Prewett, head of Regional Farms: “I think values have plateaued in some areas, while there is room for growth in others, ” he added.

The Knight Frank Farmland Index predicts further rises of around 6 percent over the next year, adding that despite concerns over the outcome of the Scottish Referendum, land values also grew by 2 percent in the first half of 2014. “The fact that uncertainty hasn’t caused values to dip underlines the inherent strength of the market,” adds Prewett.