When there’s turmoil in global markets, it is little wonder that investors turn to more esoteric investments.
However, once you’ve stocked up on gold and had your fill of so-called defensive stocks, currencies or whatever else is deemed the latest “safe haven”, what next?
For some investors, the answer is farmland. Growing demand has driven the average value of arable land in England to a record £10,800 an acre.
Private and institutional investors snapped up a third of all farms sold last year, the highest level in at least a decade, according to an analysis of Strutt & Parker’s Farmland Database, which records the details of all farms, estates and blocks of publicly marketed farmland above 100 acres in size. The latest figures are 15 per cent higher than those of a year ago.
The research found that nearly 70 per cent of arable land in England was sold for more than £10,000 an acre in 2022, compared with 33 per cent a year earlier, with particularly strong demand for cereal farms. The highest price paid for a piece of land last year was £21,500 an acre, while the lowest was £6,000. There was also a rise in demand for pasture land, typically used for grazing livestock, with prices averaging £8,500 per acre in 2022, 13 per cent up on a year earlier.
Matthew Sudlow, head of estates and farm agency at Strutt & Parker, said the transactions demonstrated that land appeared to be a haven for capital in times of economic uncertainty. He expected prices for both arable and pasture land to “remain at their current record levels, and possibly increase further”.
The financial crash of 2008 led to a resurgence in demand for farmland, with some farmers taking the opportunity to sell up and retire, particularly those feeling the squeeze from higher fuel, energy and fertiliser costs. Political instability, however, including fears about the impact of Brexit and uncertainty around the 2019 general election, weighed on prices.
Sudlow pointed out that there were no signs of demand weakening, and said: “Investors are continuing to look for tangible assets that are likely to appreciate and there is still strong demand from buyers, including farmers, looking to roll over capital gains.”