Farm Ireland

Monday 18 December 2017

Investors and emigrants driving demand for land

Average price paid for agricultural ground last year was €10,492/ac

Paddy Jordan recently handled the sale of a high class, 110ac non-residential stud farm close to Kildare town, which was brought to auction with a guide price of €1.32m or €12,000/ac.
Paddy Jordan recently handled the sale of a high class, 110ac non-residential stud farm close to Kildare town, which was brought to auction with a guide price of €1.32m or €12,000/ac.
Jim O'Brien

Jim O'Brien

Money earned on the gas pipelines of Queensland and the oil sands of northern Canada is helping to drive the rural property market.

Emigrants looking to invest back in Ireland and cash customers searching for a safe home for their money are among a new wave of private investors seeking to acquire farmland, auctioneers report.

These investors and farmers looking to expand made up the bulk of the buyers of agricultural properties last year, a major survey of farmland prices has found.

The Farming Independent survey found that the average price paid for farmland last year was €10,492/ac, an increase of 3pc or €300/ac on the 2012 figure.

The comprehensive survey of land transactions was based on 158 auctions held throughout the country and covered the sale of 8,216ac which sold for €86.2m.

The survey found distinct regional differences in price, with an average of €13,486/ac being paid in south Leinster, almost double the €7,400/ac average for Connacht/Ulster.

The average price paid for an acre of farmland in north Leinster came in at €10,070, while in Munster the price paid was €9,600/ac.

The vast majority of customers for farmland in 2013 were "cash customers" who saw land as a "safe home" for their money, Kildare auctioneer Paddy Jordan said.

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"These are people who made money from development land or CPOs and did not invest in shares," Mr Jordan explained.

He said the seven-year Capital Gains Tax holiday introduced in the last budget had also helped attract former farmers back into the land market.

The return of non-farmer investors was also a feature of the land market in the midwest.

Tom Crosse of Golden Vale Marts in Limerick said investors in good land were looking at a better return than any deposit account would offer.

"A person with cash buying 50ac of land for €500,000 will get a rental return of €10,000 per annum and with a five-year lease will qualify for a tax exemption," Mr Crosse said.

"Leave that money in the bank at the current interest rates and by the time you take away DIRT tax and bank charges the return is minimal. Meanwhile, land as an investment is maintenance free and will always hold its value."

The survey identified returning emigrants as a growing presence in the land market. Young emigrants working in Australia, Canada, China and the Middle East have become increasingly important players in the market.

Roscommon auctioneer John Earley said money from emigrants was being used to buy up smaller parcels of ground in the west or cottages and bungalows on stand-alone sites.

However, farmers remain the strongest buyers of land, particularly neighbouring farmers wishing to expand.

More than 56pc of all buyers in the survey were identified as local or neighbouring farmers.


However, there was unanimous agreement among auctioneers that the top prices would only be paid for what they termed "good land in good farming areas".

"A farmer will pay top money for 10 good acres rather than small money for 20ac of poor land," explained Peter Flynn of Robert Daly and Son, Drogheda.

While dairy farmers were mentioned by most auctioneers as among the strongest players in the current land market, Phillip Byrne of Coonans Estate Agents in Maynooth, Co Kildare, claimed to have customers waiting to buy larger farms of between 100ac and 300ac for tillage and equestrian enterprises.

Irish Independent