Maeve Dineen: Agriculture back in vogue as NAMA land lures buyers
One of the most striking statistics I've heard of late is not, as you might expect, related to the euro crisis or the amount that has been wiped off the markets in last week's share sell-off, but in relation to land ownership in this country. In rural France, one could expect a field to change ownership every 70 years, whereas in Ireland the wait would be 550 years.
Less than 1pc of our land base changes hand every year. During the boom years, slightly more land was sold as farmers took advantage of the building boom by selling sites.
But when it came to buying land -- the farmers played second fiddle to the local doctor, dentist, guard or school principal, who in their attempt to get a piece of the building-boom action chased after any field that showed signs of development potential.
At that time, it wasn't uncommon to have farms go to auction with only one farmer bidding. Everyone else was a rookie developer of some sort.
As we all know now to our detriment, the banks dished out cash to anyone with even the slightest interest in developing land and farmers and landowners who wanted money to expand their holdings were given very short shrift by the banks.
Indeed I know of numerous farmers who were told not to be wasting their time farming and advised by their bank manager to sell up -- land, livestock, milk quota, the lot and told to put their windfall into -- yes, you've guessed it -- bank shares. A lot of them did exactly that and lost it all.
Oh but how the tables have turned now. Agri-business is back in vogue.
AIB ran a series of farmer road shows lately where the agri-adviser started the presentation by apologising for forgetting about farmer during the boom years. The other banks are back training agri-advisers again and I'm being told it's one of the few areas being lent to.
This might explain why the NAMA land portfolio, which contains 24 land banks that are classified as agricultural land and dozens more sites where development never started, is attracting so much interest.
Land accounts for 18pc of the assets now owned by NAMA. Thousands of acres of land that NAMA paid almost €6bn for are set to return to agricultural production. The total acreage of land available is shrouded in secrecy, although it is believed to total thousands of acres across the 32 counties, Britain and parts of Europe. The list also includes nine quarries and some forestry land.
One receiver is handling 400-500 acres of land in Cork alone, the majority of which is classed as uncommenced development. The NAMA land portfolio includes farmland in every county except Mayo, Sligo, Leitrim, Roscommon, Fermanagh, Monaghan and Louth, although all 26 counties have undeveloped sites listed.
Auctioneers will tell you that development land had fallen in value by up to 97pc in some cases and farmers are chomping at the bit to get land that changed hands for millions of euro in the boom and is now likely to sell for €8,000-12,000 per acre.
But the most bittersweet deals of all are those involving the farmers who are buying back the land for a song, having received millions for it during the boom. A farmer in the midlands recently paid €330,000 for his 61-acre residential farm, which he sold for €740,000 back in 2005.
The bankers who are now doling out the money to farmers should remember that farmland is theoretically like any other investment class and has maximum value limit in reality.
This limit is where the price paid for the land exceeds its potential productivity and the latter is highly variable, even from month to month. Logic and reason rarely play any part in the price paid for land in this country, be it by a small-time farmer or large-scale developer.
For that reason, perhaps we should be happy that it only changes hands every 500 years or so.