The profile of farmland buyers has been dynamic over the past decade. Graph 7, in the gallery, illustrates the growth in the proportion of new ‘lifestyle’ buyers (those whose primary motive is not income generation) over the past ten years.

In 2001, farmers made up 64% of all buyers. By 2003, there were equal numbers (41%) of farmers and new ‘lifestyle’ buyers. Since then, there has been a steady decrease in the number of new ‘lifestyle’ buyers (down to 22% in 2010) as their activity has been dampened by the recession.

Recent analysis of farm transactions where Savills was involved in either the sale or purchase shows that farmers represented 56% of all buyers in 2010, down from the 61% recorded in 2009 and more in line with the 53% recorded in 2008. 70% of farmers said they were buying land to expand their farming business.

In contrast, our research demonstrates increased competition in the marketplace from investors during 2010. The proportion of institutional/corporate buyers rose to 10% of all buyers in 2010 from 4% in 2009.

Reasons for buying

In addition, the proportion of buyers citing investment as the primary reason for buying doubled during 2010 to 31%. These buyers were either non-farmers or institutional / corporate buyers. This increased competition explains some of the highest prices achieved on record for the best farms in 2010.

The proportion of buyers purchasing to expand fell in 2010 to 35% compared with 43% in 2009, and similarly those purchasing for residential or sporting reasons accounted for only 19% of all buyers in 2010 compared with 28% in 2009.

As the primary means of purchase, the use of rollover money (from development gain and other sale proceeds) increased in 2010. It was used by almost 20% of purchasers compared with 15% in 2009. Low interest rates continued to stimulate the use of loans with 27% of purchasers using loans, similar to 30% recorded in 2009.

Overseas buyers remain a small proportion for the second year running, accounting for just 6% of all buyers.

Taken from
Market Survey: Agricultural Land, 2011