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Land sales entering 'unknown' territory, warn auctioneers

Vendors and buyers have been left in limbo by the Covid-19 emergency, and experts say the banks will have a crucial role in helping restore confidence in the farmland market

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Uncertainty: This 298ac farm at Prumplestown on the Carlow/Kildare border and close to Carlow town was the largest residential holding sold at auction in 2019. It made €4.87m or over €16,000/ac, a substantial per acre price for such a large holding. It is difficult to see prices like this being made unless the Covid-19 crisis passes more quickly than anticipated.

Uncertainty: This 298ac farm at Prumplestown on the Carlow/Kildare border and close to Carlow town was the largest residential holding sold at auction in 2019. It made €4.87m or over €16,000/ac, a substantial per acre price for such a large holding. It is difficult to see prices like this being made unless the Covid-19 crisis passes more quickly than anticipated.

110ac no residential farm at Whitefields, Beaufort,near Killarney in Co Kerry made €1.925m or €17,500/ac when it sold at auction in April last year.

110ac no residential farm at Whitefields, Beaufort,near Killarney in Co Kerry made €1.925m or €17,500/ac when it sold at auction in April last year.

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Uncertainty: This 298ac farm at Prumplestown on the Carlow/Kildare border and close to Carlow town was the largest residential holding sold at auction in 2019. It made €4.87m or over €16,000/ac, a substantial per acre price for such a large holding. It is difficult to see prices like this being made unless the Covid-19 crisis passes more quickly than anticipated.

Land sales are being hit by the coronavirus emergency with auctions being abandoned in favour of private treaty sales.

However, for now, the Institute of Professional Auctioneers & Valuers (IPAV), which represents the majority of rural-based estate agents, is leaving it up to each auctioneer to decide how best to proceed.

On the ground, some auctioneers have decided to cancel all auctions.

Veteran auctioneer Paddy Jordan, who is based in Kildare, believes it is still too early to know what the impact will be, but he says the uncertainty generated at all levels by the growing crisis has to be bad for the land market.

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110ac no residential farm at Whitefields, Beaufort,near Killarney in Co Kerry made €1.925m or €17,500/ac when it sold at auction in April last year.

110ac no residential farm at Whitefields, Beaufort,near Killarney in Co Kerry made €1.925m or €17,500/ac when it sold at auction in April last year.

110ac no residential farm at Whitefields, Beaufort,near Killarney in Co Kerry made €1.925m or €17,500/ac when it sold at auction in April last year.

"Vendors, buyers and the lending agencies are experiencing huge uncertainty and, for many, the safest option is to pause. We are timing our first auctions for late April or the beginning of May, which is late for us," he said.

Mr Jordan believes the actions of the banks will be crucial in determining the impact of the Covid-19 emergency. "In this climate, it is harder to get decisions from the banks and if their officials are working from home or in isolation, it will be even harder to get decisions, especially in relation to draw-downs."

In Limerick, Tom Crosse of GVM has a raft of land sales ready to go, but he sees a growing reluctance on the part of vendors to proceed. "We are in the unknown and that's not a great place in which to make decisions," he said.

In relation to the method of sale, he has decided to avoid public auctions and opt for private treaty sales. "The current indoor limit is 100 people, but how are we to decide who comes into the auction room?"

He agrees with Mr Jordan that getting decisions from banks will get harder.

"Will credit committees meet and will they be willing to lend money into a market where the asset could lose much of its value as the crisis worsens?" he asks.

"I think the best thing we can do at the moment is to pause and reflect," he said.

Stephen Barry of Raymond Pottertons Auctioneers in Meath expects the pause button to be engaged by vendors and purchasers.

"Selling land by auction or by private treaty involves a five-week lead-in time, and I expect that cannot now start until this virus is under control," he said.

The Navan-based auctioneer believes the crisis may have one silver lining,

"Land is so wet at the moment, perhaps a delay is no harm. At least ground might be dried out by the time things return to normal," he added. And he believes the price of land will hold no matter how long the crisis lasts.

"At the moment, we see queues out the door of supermarkets and shops for bread and milk, but what does it take to produce bread and milk? It takes land."

Land leasing

Auctioneers agree that even before this crisis emerged, the prices of letting land was slipping. Cork auctioneer Dan Fleming says people realised that €400/ac and more for letting and was not sustainable, especially among tillage farmers.

"People have become very cautious and prices are back by €100/ac and more," he said. "We are now looking at €220/ac for tillage and anything between €200/ac and €250/ac for top-class grazing and fodder ground."

He believes the current crisis will put a further damper on prices and the willingness to enter into long-term leases.

Joseph Coogan of Castlecomer agrees, saying the land letting market has cooled considerably of late and the bigger prices paid earlier in the year have come back somewhat. Meanwhile, there is a general pull-back on commitments as the coronavirus situation gets worse.

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