As the referendum for Scottish independence looms ever closer, commercial property market analysts are finding the challenge to predict future trends somewhat difficult due to the number of variables in play.
It may come as a surprise to some, then, to learn that the value of farm land north of the border rose significantly in the first half of the present year, defying claims that the value of all commercial space in Scotland would drop until a firm decision had been made regarding the country’s future.
Average values rose by just under 2 per cent between the 1st of January and the 30th of June 2014, with the cost of an acre coming in at £4,329. According to data released by property agent Knight Frank, this means that prices have grown by 223 per cent in the past decade and by 8 per cent during the past 12 months alone.
Knight Frank farm agent James Denne believes that the latest set of results demonstrates the durability of the farm land market in Scotland.
He says; “There has been a lot of talk about the impact of the referendum, CAP reform and land reform, but there is much more confidence in the market for agricultural land than you might imagine, particularly for good arable ground.
“The fact that all the uncertainty about the vote hasn’t caused values to dip underlines the inherent strength of the market – supply is still very limited and demand remains firm.”
One of the main factors pushing up values has been interest from foreign buyers, with Knight Frank having completed two £10 million-plus sales to overseas parties within the past 18 months. The sale of the 28,300 acre Auch and Invermearan Estate, in particular, proved particularly exciting as it sold for a sum above its £11 million guide price.
Yet while the agricultural aspect of the estate certainly proved to be a strong draw for the successful international buyer, head of Knight Frank’s Edinburgh office Ran Morgan believes an altogether different potential use sealed the deal.
He says; “Although a truly stunning sporting and upland farming business, the estate’s potential to generate hydroelectricity was one of the main reasons for the purchase.
“Despite all the hype over independence, there is a real appetite for Scottish land holdings from investors, especially from overseas.
“Potential buyers are particularly interested in estates that can produce significant income in the form of renewable energy, a massive resource for Scotland, or via a commercial agri-business.”
As Scotland’s traditionally active period tends to fall in the second half of the year, it will be interesting to see what, if any, impact the referendum has upon farm land transactions and values over the coming six months. Yet with buyers clearly keen to chase after sites ripe for energy production, it may well be that Scotland will see farm land prices continue to grow regardless of the outcome of the referendum.
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