London, 27 February 2012, With the crisis in the Eurozone and the global volatility surrounding the Arab Spring, there has never been a time of greater macro-economic uncertainty; which is spurring a flight to financial ‘security’.
As the scarcity of an asset class continues to make it secure as an investment, the agricultural land market has, alongside prime central London residential property, proven to be a safe financial haven for investors and as a result, prices have soared over the past half decade, reaching record levels in the latter half of 2011.
According to RICS, the average value of farmland is £8,386 per acre and agricultural land prices have doubled since 2005. However, with the heat coming out of the market since the summer peaks and a high yielding global harvest likely to cause cereal prices to fall, is the bubble due to deflate?
In Carter Jonas’s 2012 Agricultural Land Indicator, head of Research, Catherine Penman, looks at the warning signs.
“We don’t predict a crash,” comments Penman, “but in our view, prices are unsustainably high, driven by intense demand and lack of stock.”
The latest study by the national property consultancy reveals agricultural land showing a more consistent and measured increase in value since 2000 than either oil or cereals. In 2010, scarcity of land on the open market was a key driver in price rises but during 2011 the security of land as an asset class proved an increasingly significant factor in demand as the spectre of recession and sovereign debt continued.
“Land cannot be deemed immune from the wider economic climate and whilst average prices on a national scale are not expected to fall more than five per cent over the next 12 months, this would be a notable change to the overall tone of the market from recent years. No asset class moves in one direction alone and this expected pause in the market, with prime land prices holding steady rather than climbing, may well predicate further falls over the next five years,” concludes Penman.
To view the Carter Jonas 2012 Agricultural Land Indicator please click here.
For press information contact Gemma Haimes, head of PR, Carter Jonas, 020 7298 1822 firstname.lastname@example.org