Shropshire Magazine

Agricultural land and property makes for a strong market in the county.

Headlines have been screaming out for some time that little else but doom and gloom surrounds the property market. While no one would deny that the industry is suffering to a greater or lesser degree, some areas of the wider property market are more than holding their own, not least land and agriculture. Henry Carpenter investigates

“We have never known demand for agricultural land to be as strong as it is now,” says the chairman of Halls, Peter Willcock. And that is a comment which must make other areas of the land and property industry turn green with envy.

His is not a lone voice in Shropshire when it comes to admitting that agriculture, and land and property associated with it, flies in the face of a property market which is, otherwise, sluggish at best – according to the ceaseless media reports anyway.

Barbers, for instance, is another Shropshire firm which is enjoying good results from the sale of land, and rural partner Mike Taylor still considers bare land to be a good investment. He has seen good quality farm land rise from £3,000 per acre in 2006 to over £5,000 per acre in 2008; demand in the first quarter of 2008 far outstripped supply.

“The changes in capital gains tax rules which came into effect on April 6 meant that March was an incredibly busy month for land and farm sales,” says Mr Taylor. “Despite increased activity, there was no let-up in demand, with prices consistently exceeding expectation.

“The properties which I find to be most sought after are those with between five and 20 acres of good, level and well-fenced and drained pasture land, preferably with running water like streams, and access from a quiet lane – particularly for those equestrian clients.”

He points to properties such as Cheswardine Park Farm as examples. “On the outskirts of Cheswardine, Cheswardine Park Farm was a well-equipped dairy farm with a four-bedroom farmhouse and 326 acres, and sold well in excess of its guide price of £1.75 million,” adds Mr Taylor.

Soudley Villa sold recently at a price 50 per cent higher than expected through Barbers.

“And Soudley Villa was one of many properties which sold at auction. This period property was on the market at a guide of £400,000 and sold for £620,000. It required complete modernisation and had a range of traditional brick outbuildings and pasture land amounting to 2.25 acres.”

These are big prices.

Halls reckon that the demand for farms and houses with land across Shropshire and bordering counties has reached unprecedented levels and the firm achieved record sales of more than £10 million for farms and agricultural land during March.

Mr Willcock says: “There are huge opportunities for people who are thinking of selling farms and land because there is a lot of unsatisfied demand in the market and we have lots of prospective buyers on our books.

“The surge in land prices is due to a number of factors. Farmers are buying land to expand due to a rise in commodity prices; city institutions are looking for investment opportunities; foreign buyers, particularly from Ireland, Denmark and Holland, are looking to buy land here; and there are investors who are nervous about the stability of the financial markets and are looking for a safe haven for their money.

“There are also non-farming people who just want to own their own small parcel of land, ideally around 20 to 30 acres.”

Mr Willcock says the buoyant market reflects renewed confidence and optimism in agriculture. “We have been through a difficult period where we had static land and commodity prices for a number of years, when agriculture contracted,” he explains.

“Now this appears to have bottomed out and there are much better prospects for farming, with rising commodity and land prices.”

Land with water finds buyers keen on exploiting the leisure possibilities.

Farms sold by Halls at auction during March included Onston Farm, a 318-acre mixed arable farm at Tetchill, Ellesmere, for £2.63 million; Hine Heath Farm, a 143-acre dairy farm at Stanton, near Shrewsbury, for £1.36 million; and Cae Howell, a 181-acre dairy farm at Edgerley, Kinnerley, near Oswestry, for £1.046 million.

Underpinned

Timothy Main, of Balfours Property Professionals, says the devil is in the detail. “It has been the lifestyle buyers who have underpinned the land market with increasing strength for the past 10 years.

“They have frequently got investors and landowners out of trouble as farms have been carved up into marketable chunks, with the farmhouse plus a few acres fulfilling the dream. The British who make money still want to own their own piece of this isle.”

There is the catch though, according to Mr Main. Land, he says, both in Shropshire and further afield is a finite resource. Furthermore it is a known fact that the amount of land coming onto the market has fallen year on year for the past 20 years.

Mr Main goes on to explain: “During this time farmers have had to improve their businesses and many have found ways of making money with cereals at £60 to £80 per tonne. Now with prices between £150 and £190 per tonne, even after rising fertiliser and fuel input costs it is extremely profitable.”

Milk and, most recently, beef and lamb prices have also seen significant increases. However, Mr Main explains that these sectors must either feed the more expensive cereals or compete for land that grows cereals; as a result we are seeing increases on the supermarket shelves, not only for cereal based products, but for dairy and meat products which will continue.

This poses another question: How sustainable are the rises in food prices?

“The global pantry is at an all-time low as a result of both the US and Australia suffering droughts last year,” says Mr Main. “Add to this an analysis of people: not only is the world population set to increase by more than two billion to 9 billion by 2050, but the aspiration of China and India is increasingly sophisticated – a staple diet of rice is being replaced by demands for proteins and luxuries including meat and dairy products.

“There is also the matter of bio-fuels which have reduced the land available for food production. One must conclude rising prices of food stuffs is inevitable.”

Mr Main says that Balfours now has many more farmers, landowners and investors on its books, all seeking more acres which they can now justify because farming is more profitable.

Equestrian facilities are always popular.

“The institutional investors are back on the scene too because of the down-turn in returns from property and the stock markets and the potential profitability of land ownership.

“The strengthening market is substantiated by increasing activity among our clients. Last month alone we purchased two farms on behalf of clients. Sales in the same period have included whole farms, paddocks, woodland and water.”

And he agrees with Mr Willcock that it is not just UK farmers who want to buy more land. He reckons that in the past 18 months, increasing interest and investment has been made by Irish and Danish farmers who find UK land relatively inexpensive compared to back home where land prices are five times higher and twice the price of the UK land prices respectively.

What’s more, he is cautiously optimistic about the future of land in the county.