East Anglia's farmland values edge closer to 2015 highs

If the trend continues, prices could return to their 2015 highs - when prices soared to record levels. Land agents say the increase has been partly driven by tight supply as the amount of publicly-marketed land stayed low.

There were some significant sales highlights though - including 340-acre Hill Farm at Martlesham, offered up by Clarke and Simpson at a guide price of £7.5m and sold off market in two lots - with the bulk going to Suffolk Wildlife Trust.

Another 300 acres of commercial arable land at Saxmundham was snapped up for in excess of its guide price of £3.2m following competitive bidding, said agents Strutt and Parker.

Strutts also sold Carlton House Farm near Bungay - which came with 1,244 acres and fetched in excess of its guide price of £13.65m following 30 viewings.

Meanwhile, Savills presided over the sale of the 1,776-acre Exning Estate near Newmarket (guide £50m), the 4,179-acre Coldham Estate in Cambridgeshire (guide £43.5m) and 198-acre Rectory Farm near Framlingham (guide £2.5m) - all of which sold for more than their guide price.

Brown & Co's sale of  623-acre Fowes Manor & Red House Farms at Little Yeldham in Essex, achieved more than its guide price of £6m.

The firm also sold 511 acres of farmland at Wetherden Hall Farm, at Wetherden, near Stowmarket, which netted "well over" its guide of £4,750,000.

Fen Farm at Washbrook, near Ipswich, exceeded its guide of £2,750,000 when it was sold through Brown & Co.

Oliver Holloway of Clarke and Simpson acknowledged the amount of publicly-marketed land in East Anglia remained "relatively low" compared to recent years.

But Clarke & Simpson was still involved in the purchase and sale of more than 2,500 acresduring 2022, he said, and had seen average values of farmland rise almost back to the peak levels seen in 2015. Bare land rose by around 10%.

"Demand has been increasingly driven by local farming interest, rollover relief and a more recent entrant to the market place being rewilding or sustainability-focused buyers," he said.

Will Hosegood of Brooks Leney said just as much land and farms were purchased and sold on the private market as on the open market in 2022. 

"Generally, we have seen strong demand for well-priced quality land holdings but as always, price depends on the make-up of the property including location, acreage, land quality and cropping capabilities, as well as opportunities outside the traditional land uses to generate alternative income streams, spread risk and diversify revenue streams," he said. 

"We have also seen some very large estate holdings sold on the open market this year appealing to an even wider buyer base."

William Hargreaves, who leads the rural team at Savills Suffolk, said the year had been "a perfect storm" for the farmland sector.

"Despite seeing a rise in the quantity of farmland being publicly marketed, demand still outweighed supply and average values increased significantly.

"The average price of prime arable land in the East of England is now almost as high as it has ever been at £10,100 an acre for example, while in some cases we have agreed deals for up to 20% more than the guide price.

"A lot of this activity has been driven by commercial farmers wanting to expand their existing operations, but we have also seen continued interest from those who want to invest for financial or lifestyle reasons – further contributing to competitive market forces."

More farmers were seeing the advantages of selling up as they retire, and it was a trend that was likely to continue, he said, while the rise in input costs was forcing many to reassess their businesses.

“That said, farmers often tend to be long-term decision-makers and are inclined not to buy or sell land impulsively as a result of a single good or bad year. Purchasing and sale decisions are made rather on the basis of longer-term trends in the market – so land tends not to come up all that often.

"Consequently we believe values will continue to rise. There remains a strong pool of buyers and we have been speaking to a growing number who are sitting on relatively large reserves of money – or who have a strong borrowing capability – and want opportunities to invest."

There was strong demand from rollover buyers looking to take advantage of the benefits of buying agricultural land for capital gains tax purposes and other advantages such as agricultural property relief for Inheritance Tax, he said.

Will Hosegood of Brookes Leney said 2022 had been an unusual year with many farms coming to the market throughout the year instead of the usual spring flurry.

"However, the uncertainty in the market and the decision-making process has meant farmers have decided to sell throughout the year and with an abundance of buyers, this does not seem to be impacting the sale process and price," he said.  

"Overall we have generally seen more buyers in the market than sellers, therefore the demand is outstripping supply."

Giles Allen, Eastern Estates and Farm Agency, Strutt & Parker, said the 2022 farmland market in eastern England had proven "incredibly resilient" against a backdrop of economic turmoil, rising interest rates and massive hikes in input costs.

"Demand remains strong and while supply levels are up in the region, it has not been by enough to satiate demand," he said.

"This has resulted in an increase in values, with the majority of sales this year agreed at prices which are between 5%- 10% higher than a year ago.

"We believe this reflects increased commodity prices resulting in better arable farming profits , proceeds from development sales being rolled into farmland and a general increase in demand for what is seen as a secure asset in uncertain times.

"In what is predominantly a commercial farming area, irrigated land and fully serviced arable farms with modern facilities have performed best, with existing farmer buyers and new investors keen to secure these ‘best in class' properties."

Robert Fairey, partner at Brown and Co, reported rapid rises in land prices across  the region during 2022.

"Arable land has generally increased from around £8,500/£9,000 per acre at the start of the year to in excess of £10,000 per acre at the end of the year," he said.

"Naturally every farm and locality is different  but in broad terms these figures reflect the reality of the situation.

"One of the features of  2022 was the number of rollover buyers in the market. On the Wetherden and Little Yeldham farms we had 5 or 6 bidders on each farm of which a  large proportion were buyers looking to reinvest development proceeds."

Land agents believe farmland's upward trajectory will continue next year - partly because of the turbulent economic situation.

"The market will stay strong in 2023 because we  simply have more buyers than sellers so we desperately need more land to sell to satisfy the demand," said Mr Fairey.

Mr Holloway said: "In my view, unless there are sudden changes to the current taxation regime, given the continued imbalance between supply and demand, which shows little sign of unwinding, I predict that the land market will remain very strong indeed. 

"Against a backdrop of mounting economic uncertainty, investors will continue to search for safe havens for their capital and in such turbulent times, it is often assets such as farmland and woodland that come into their own and we have already noted an increase in the number of enquiries for farms and land in recent months."

Mr Hosegood said he was optimistic about the future of the land market. "Generally, during a recession, agriculture is a safe haven for funds as landowners can see and stand on their investment, rather than watch them increase and decrease on a screen."