Key factors shaping the Farms and Estates sector
Activity was slow to materialise last year as the quiet winter months were followed by the first Covid-19 lockdown in March, hindering the usual spring activity. In May the market picked up and gave way to a busy summer as pent-up demand was released.
Supply continues to be a key factor and for the second consecutive year, publicly available land achieved a new record low. Uncertainty over the Brexit trade deal, the future of agricultural support, potential tax changes and Covid-19 have all led to reduced confidence, with many potential sellers opting to wait for clarity around these issues before committing to any major decisions.
Demand from both existing landowners and investors underpinned values, which remained largely static due to the lack of supply. Although some sub-sectors saw strong growth, with competition for lifestyle, amenity land and woodland attracting significant interest as buyers looked for alternative forms of investment and more green space.
During 2020 we saw genuine activity from emerging markets, including buyers looking at the environmental ‘value’ of land and the opportunities for diversification through carbon offset initiatives and net zero emission targets. This coupled with other competing land uses, such as development and energy production, further widen the appeal and competition for this finite resource.
Looking ahead, we expect values to remain steady in the short-term, particularly for good quality units. The free trade deal with the EU is providing some confidence as it will mean continued access to the single market and current expectations over tax reform may be less punitive than feared. Although some sectors will remain cautious (particularly farming buyers) until there is greater clarity on the impact of the Agricultural Transition Plan and the future or farm support.
In the medium to longer term we expect greater confidence, particularly from the investment sector. Restrictions on supply are likely to underpin the market, with competing land uses (development and energy production) sitting alongside traditional farming and new emerging markets (environmental sector) providing a diverse landscape.
If you are seeking professional advice and would like to speak to a member of our Farms & Estates team please contact David Ward on 01206 216550.