RICS Expects Commercial Farmland Values to Rise

Latest Rural Market Survey, performed by the Royal Institute of Chartered Surveyors, RICS, shows that lifestyle farmers are currently less active on the UK farmland market than commercial farmers are. As such, the vast part of Chartered Surveyors reported a declined demand for farmland for residential use, which remained negative since the 1st half of the year of 2009. Almost 30% of surveyors reported a fall rather than in rise in this type of demand. It should be noted, that the demand for residential farmland slipped into the negative territory in early 2008; since that time, the situation ameliorated slightly with a rise from low of -64, which was marked at the end of 2008. It is interesting that the demand in the commercial farmland sector has been strong as 22% of surveyors have reported an increase rather than a decrease. The fact is being explained by the return of commercial farmers, wiling to expand their land portfolios and production, on the farmland market. Statistics demonstrates that the demand for UK farmland from foreign farmers and investors, particularly, Irish, has declined. UK farmland prices continue to decline in spite of the improvement of market activity; however, it is to be noted that the decline in values is very modest. For instance, RICS has estimated that fall in bare land values amounted to a mere 1%, which resulted in an average decreasing from £12,336 per hectare to £12,172. As for arable land and pasture land, they saw a 1% and a 2% decline respectively and average falling from £13,182 to £13,085 per hectare and from £11,490 to £11,260 accordingly. Experts say that the restricted supply of land for sale provides stable support for farmland prices in the UK. However, the opinions on the future of farmland prices are divided. Unsurprisingly, in the non-residential sector, 15% of surveyors are expecting a rise in prices, while 9% of surveyors are determined prices in the residential sector will continue to decline. On the other hand, the situation has significantly improved from that of 2008, when 79% of surveyors expected a decline in land values.