Farm Ireland

Saturday 23 March 2019

Less people buying farms for 'love of the land', says auctioneer

2018 was a difficult year to arrive at a market summary in terms of the land market
2018 was a difficult year to arrive at a market summary in terms of the land market
Margaret Donnelly

Margaret Donnelly

Business men and developers were key figures in auction rooms during the Celtic Tiger years, eager to bolster the small holdings they may have come from, or 'go back to their roots'.

But such buyers are few and far between these days in Leinster according to Clive Jordan, Director of Jordan Town and Country Estate Agents.

In fact, there's limited interest from business people in farmland these days, he says.

"Traditionally, many builders and developers had come from farming enterprises, albeit in some cases small holdings, but once their own business gathered momentum and they had spare funds part of their desire was to buy a farm, go back to their roots as such.

"When the market collapsed in the mid 2000s many of these got into well publicised difficulty and their companies were taken over, wound up and merged into other entities.

"We believe this is largely a result of the change in the general type of business person now financially strong enough to purchase such an asset.

"The new generation of CEO have been brought up on a different ethos; focus is on asset return and commercial viability. The purchase of farmland never stacks on this basis and the ‘love of the land’ does not carry the weight of old."

In its most recent price survey, Jordan Auctioneers says land in Leinster, which is where the bulk of its sales are, still has many variations from county to county.

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"Applying an average rate across an entire region can be very simplistic and although it can be referred to as a benchmark the variations on same can be substantial.

Instead, Clive says their books show that 2018 was a difficult year to arrive at a market summary in terms of the land market.

"The season was slow to commence due to a winter and spring that never seemed to end and this pushed out land sales from the traditional starting time of March or April to May and June as some land was simply not presentable. 

"In addition to this the fodder crisis meant both buyers and sellers were more focused on day to day survival than making key long term decisions."

Quantity and quality of the land being offered, he says, are still the key factors in any sale. "Large land holdings are more in demand than smaller parcels unless you have a number of adjoining farmers who are looking to expand and willing to bid against each other. Quality is always a key ingredient with land and considering the number of bad winters and summers experienced in recent times selling poor or marginal land is proving difficult."

However, he also said that your neighbours are often key, unless the parcel of land is large enough for someone to relocate entirely.

"You need active farmers looking to expand their enterprise in an area where land is being offered for sale unless the quantum is of such a scale that purchasers might entirely relocate.

"We have noticed a considerable variation in values from the stronger farming areas to the weaker regions and this is even though the quality of offering is broadly comparable."

And it's dairy farmers, he says, with ambitions who push for a deal if adjacent land comes up for sale. "Some farmers have fragmented holdings which makes handling stock difficult so when parcels come for sale adjacent to the main yard or milking platform they will generally try to negotiate. In some instances they have sold outfarms to facilitate the purchase."

Land sales, he said, are now more financed than recent years. "For the second year running we have experienced far more transactions being dependent on finance to complete. Prior to this there seemed to be money which perhaps had been hived away in the Celtic Tiger to buy land at a future date.

"Up to 2016, 80pc of our land sales were cash based. In 2017 and 2018 we estimate this percentage to be less than 40pc. Customers tell us that while bank lending has improved this is largely to customers with very strong enterprises, low debt levels and with firm business plans."

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