Established 25 years ago, this year Savills Rural Research is celebrating a significant milestone. Since then farmland values have increased significantly and there seems little to hinder their performance in the near future.

This edition of the Agricultural Land Market Survey reports in detail on many aspects of the 2010 farmland market for Great Britain and offers Savills' outlook for values.

2010 was a year of highs and lows. The agricultural industry remained bullish against a backdrop of macro economic uncertainty. Wheat prices soared to over £185 per tonne during the second half of the year and the Coalition Government announced unprecedented austerity measures and spending cuts.

Strong demand, rising values

Across Great Britain average farmland values continued to rise but the strongest rates of growth were in the eastern counties of England. This rise in values was not exclusive to the UK; values around the world have continued to grow.

Demand for farmland continues to be strong with an increase in new applicant registrations. Our research shows a clear trend towards buying for investment purposes. In the arable sector, high commodity prices boosted income returns, and this, combined with strong capital growth, enhanced the investment performance of this low risk asset.

Farmland, along with gold, is a good hedge against inflation and as Graph 1 in the gallery illustrates, the strength of drivers over and above productive capacity have weakened land’s relationship with commodity prices in Great Britain.

Taken from
Market Survey: Agricultural Land, 2011