Farm Ireland

Friday 19 January 2018

'There has been no reported effect of the Leave vote on UK farmland prices'

The UK agricultural world, the report says, voted strongly to leave the EU.
The UK agricultural world, the report says, voted strongly to leave the EU.
Margaret Donnelly

Margaret Donnelly

New report on UK land prices states that UK farmland is a 'safe haven' for investment.

British farmland could offer a safe haven for investment at a time when many countries are operating with very low or negative interest rates, according to the Central Association of Agricultural Valuers (CAAV).

Secretary and Adviser to the CAAV, Jeremy Moody has said that despite the uncertainty of Brexit, agricultural property offers a secure rental yield and potential for longer-term capital growth.

Launching the CAAV/Royal Agricultural University report on UK property markets, at a conference for European property valuers  in Dublin this weekend, he said that negative interest rates and quantitative easing made for a challenging situation for investors, who were already spooked by the uncertainty over Brexit.

“Half of Eurozone government debt now has negative interest rates. It can be hard to understand a world where people are lending money at negative interest rates, not just to governments but, in Denmark, even on some mortgages,” said Mr Moody.

“While it is natural for discussion to focus on risk and uncertainty for assets, that applies to all investments, not just property. In such a world, property can offer security with a yield from rents, a physical reality and prospect of later development.”

There has been no reported effect of the Leave vote on farmland prices, according to the report. It quotes UK auctioneers Savills that anecdotal evidence suggests that deals agreed prior to the Referendum are largely being honoured and a number of new deals have been struck since 24th June at levels anticipated beforehand.

The report goes on to quote other UK-based auctioneers and says that the agricultural world, perhaps especially the livestock sectors, voted strongly to Leave and so it is plausible that the outcome has not damaged sentiment.

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It also says that any immediate hit from the fall of Sterling against the euro has seen the consequent boost to product prices and prospectively to 2016 direct payment values, comforting farmers bruised by the low product prices of the last two years.

The report looks at what’s actually happened on the ground since the EU referendum in June.

He said that despite many forecasts in the campaign, markets have overall stayed on the paths they had before the referendum.

 “This is a story of commercial sense seeing through the turbulent moves in sentiment that immediately followed the vote.

“Agricultural property has its place in that with a yield better than German government bonds and without the issues and changing markets for buildings with their increasingly short lives.” 

Online Editors

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