Rural property investment safest haven
Date of Article
Jul 04 2012

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4 July 2012, Economic turmoil across the European continent has created widespread difficulties for numerous investment sectors however the price of rural land in the UK continued to grow in 2011, according to the latest IPD UK Rural Property Investment Index on which property consultancy Carter Jonas has commented.

Commercial property values may be in decline across most of the country, although the rising price of commodities, which has led to rising profitability in the rural sector, has attracted further interest in land as a safe investment.

IPD Investment

Demand for agricultural land strengthened throughout 2011 as investors continue their ‘flight to safety.’ Both active farmers and investors proved acquisitive, due to the safe haven status of the asset class. Furthermore the restriction in the amount of land available, and the weight of money moving in, has led to considerable pressure on prices.

Iain Nott, senior associate in the rural division of Carter Jonas in Peterborough, comments, “Agricultural land has continued to remain in high demand from a widening array of investors. The ongoing period of macro-economic uncertainty and turmoil has underpinned the need for safe havens for investment, and land has been a beneficiary of this trend.

“With limited stock levels available on the open market, prices rose throughout 2011. Prime farmland values are forecast to continue to rise although at a slower pace than witnessed last year as the amount of land for sale remains relatively low. However, there is increasing evidence of a two tier market appearing with values of poorer quality farmland forecast to witness a decline.”

The significant tax advantages in holding agricultural land, for investors and individuals, have further reinforced its performance compared with alternative asset classes. The powerful tax advantages of holding land means there is little incentive to bring to the market, ensuring supply remains scarce, which will underpin current values.