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Prime farm land sees 14% growth in UK, but with regional variations
Values for prime arable land has strengthened across the UK by 14% to average almost £10,000 per acre, according to the latest survey figures. It is set to see 8% capital growth and 5% to 6% rental growth from 2015 to 2019, an analysis in the latest Savills farm land value survey suggests. The average capital value of farm land has shown very significant growth of over 250% during the past decade, however, this conceals regional variations with factors including land quality, position and local demand key drivers to an outcome. ‘The flight to quality, particularly in respect of arable farm land is a major contributor to the widening gap in values including between England and Scotland,’ said Alex Lawson head of Savills farms and estates. ‘If this gap continues widening the opportunity for investors to acquire land in Scotland starts to become quite compelling. Likewise there are buyers who are choosing to take advantage of the relatively good value poorer quality livestock land,’ he added. Market activity continues to include a variety of buyers and sellers. Last year non farming and lifestyle sellers accounted for more buyers than farmers compared with in 2000, when almost three quarters of them were farmers. On the buying side, political uncertainty coupled with the latest CAP reforms have encouraged some potential farmer buyers to sit tight. They represented 45% of all buyers down from 60% in 2011. The proportion of overseas buyers has remained steady over the past three years at around 8%. This is almost double the activity during the height of the recession from 2009 to 2011, but significantly below the mid noughties when collectively they accounted for over 20% of all buyers. According to Savills’s forecasts top quality agricultural land will be a long term performer in 2015 to 2019 with 8% capital growth and 5% to 6% rental growth, while investors with industrial properties as well as secondary office schemes could be set to see as much as 10% capital growth in 2015, with secondary retail at 9%. ‘Farmland supply is historically low, product is finite and competing land uses combined with diverse ownership keep values positive but a local understanding of market conditions is key to investing well in this sector, and only the top quality stock will achieve 8% growth,’ said Ian Bailey head of rural research at Savills. The report points out that the key to these returns is the focus on supply and demand fundamentals whilst taking into account factors such as the UK general election, mansion tax proposals and mortgage market review. However, whilst there may be an effect on sentiment in the run up to the election, the impact for commercial and agricultural markets is likely to be muted. Drawing on the macro-economic story, Savills predicts base rates will not move in the short… Continue reading
Apartment and villa prices fall in Dubai at beginning of 2015
Residential property prices in Dubai fell by almost 4% in the first six weeks of this year with both apartments and villas seeing declines, the latest research shows. Prices for apartments fell by 3.7% and villas by 3% respectively, the latest report from Phidar Advisory shows. Sales increased by 1.7% in January, the data also shows. Price falls are outpacing rent declines, pushing yields up to 7% for apartments, the report shows, with the report pointing out that residential investment potential is at a five year low. However, the report notes that within this overall figure, apartment volumes were up almost 8% in January, while single family home volumes halved in January compared to the same period in 2014. Apartment lease rates remained stable with a nominal decrease of 0.5% while lease rates for single family homes decreased by 2.4%. ‘Our index indicates that the propensity for investing in Dubai real estate is at a five year low point. This is a first draft and we are developing more complex iterations integrating additional variables that influence capital flows,’ said Jesse Downs, managing director of Phidar Advisory. The report downgrades rent projections to softening and says that sale price declines will continue to outpace rent declines, allowing yields to gradually expand through 2015. ‘As long as general price deflation is averted, rent stability or softening can help control labour costs, which can facilitate business and economic growth. Ideally, this is paired with countercyclical monetary and fiscal policies to the real estate industry that facilitate economic diversification,’ explained Downs. The report also points out that, while the US dollar remains strong, demand for Dubai real estate will likely remain low and yields should continue to guide market trends. ‘Recent transaction volume contraction was caused by dwindling domestic and foreign demand,’ added Downs. Meanwhile, figures from the Dubai Land Department shows that Indians continue to top the list of expat property buyers in Dubai. Total investment by Indians in the realty market increased marginally to Dh18.123 billion from Dh18 billion in 2013. Br British expat buyers were next but the amount investment fell from Dh10.4 billion in 2013 to Dh9.318 billion in 2014. Pakistanis coming third on the list with property purchases worth Dh7.588 billion, down from Dh8.6 billion in 2013. Citizens of Gulf Cooperation Council (GCC) states bought property worth Dh32 billion through 7,186 investors in 2014. Overall there are more than 140 nationalities investing in the property market in Dubai with total real estate transactions amounting to Dh218 billion in 2014. Continue reading
Land reform proposals in Scotland criticised by RICS
Proposals put forward in Scotland for agricultural land reform have been heavily criticised by the Royal Institution of Chartered Surveyors which say they could increase disputes between landlords and tenants. Responding to the recently published proposals, RICS says it is concerned that the proposed measures will not lead to a revitalised tenanted sector and may also result in fewer farms made available to let in the future. It adds that this is clearly not in the public interest or in the interests of a vibrant tenanted farming sector in Scotland and could trigger unintended consequences that would serve no benefit to rural areas. ‘We are committed to building consensus across the rural sector and ridding it of poor practice. We encourage anybody operating in the rural sector to engage the services of professionally trained and regulated land management specialists,’ says the response paper from RICS. It explains that more efficient and sustainable food production must be a leading objective in any restructuring of the sector. ‘Our view is that these proposals appear to overlook this, seeking instead to focus on land tenure and the small number of land agents who may not be professionally regulated, rather than focussing on how to stimulate and assist new entrants to the tenanted farming sector,’ it explains. ‘Freedom of contract is important, and some recommendations in the Review will pave the way for more flexibility and choice crucial to revitalising the sector, but the extension of assignation could also remove opportunities for new entrants,’ it adds. ‘RICS does not tolerate bad practice. Our members are already properly and strictly regulated, and we have a robust code of conduct to which our members must adhere. RICS welcomes the proposal for a Tenant Farming Commission, as this may improve the landlord tenant relationship,’ it continues. ‘However, we have to raise the issue that land agents who are members of RICS already operate under the Institution’s strict guidelines and codes of practice. Any new code of practice from the commission would have to take note of that fact,’ it says. It also points out that any land reform policy change will impact significantly on the public and RICS members. ‘We are firmly of the view that land reform should be approached as a long term, sustainable and workable programme where all parties continue to invest human and financial capital to make land, places and communities successful,’ the response says. ‘Land reform should not be focussed purely on who owns the land but how it is effectively managed and used for the benefit of communities, the environment, and public and private interests. Best practice land management is key to ensuring sustainability,’ it points out. It also says that while legislation provides a legal framework on land reform matters, its implementation is dependent on addressing three critical elements. Firstly, defining designations and processes so that all parties understand what, why and how matters can be exercised; secondly, providing support for all parties so… Continue reading
