Farm Ireland
Independent.ie

Friday 17 November 2017

'Cash is king' in land market, report claims

Jim O'Brien

Jim O'Brien

CASH continues to be king in land purchase. A review of the first half of 2012 in the agricultural land market by Jordan Auctioneers reported that few sales conducted by the firm this year needed credit.

"This may be as a result of land sold in the boom years or monies obtained from a road scheme," said Clive Kavanagh, who compiled the review.

Of the 1,000ac sold by Jordan Auctioneers so far this year, approximately 900ac was sold for farming purposes.

In an interesting observation, Mr Kavanagh notes that younger people are returning to the land, and adds there is a "natural enthusiasm" among parents and older generations to acquire land to provide the additional scale needed for a profitable enterprise in the future.

He the agricultural land market as strong, with land in Kildare and its environs averaging between €12,000 and €13,000/ac.

"To date, we have sold almost 1,000ac of land across a wide geographical area. Interest levels and enquiries have been in excess of those over the last number of years, but land needs to be correctly priced and valued at the outset," Mr Kavanagh added.

In the review, Mr Kavanagh identified a number of common features found in the market this year.

He said public auctions was proving to be the most effective and popular method for the sale of agricultural lands. Reflecting the trend of the last number of years, he said farmers were "the sole drivers in the market", and there was little, if no, interest from other parties such as business people, speculators or developers.

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He claimed the presence of zoning or planning permission was having little, if any, effect on values and was not contributing to any defined premium.

To illustrate this, Mr Kavanagh quoted the example of 75ac on the edge of Carlow that was zoned for 'residential' and 'industrial' purposes and sold for €13,000/ac.

The uncertainty surrounding the euro and the global economic situation had also encouraged some farmers to buy more land.

"The fear that savings could be devalued and that it is better to have a 50ac field than €500,000 is very evident," said Mr Kavanagh.

development

A proportion of the land coming on to the market was once bought for development and is now being sold on the instructions of banks and/or receivers, the report claims.

Mr Kavanagh made the point that the sale of this land could be complicated, in so far as vendor goodwill was of essential importance.

"If there is an inclination amongst the farming community that land is being sold under duress, it can have a detrimental effect on the likelihood of achieving a result," he said.

While Mr Kavanagh maintained that the prospects for the land market for the remainder of the year were positive, he added a note of caution.

"The poor weather conditions and confidence amongst the farming community may be affected if harvest 2012 is a disappointment and the various sectors experience further hardship," he said.

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