Wall Street Daily | Apr 21, 2014
The Great British Farmland Boom
Capitol Hill Daily Research
Cash rolls down the beautiful green hills of England and right into the pockets of Britain’s Co-operative Group. Farmland is now one of the UK’s greatest money makers…
Our very own Floyd Brown also pointed out in his recent article that Americans are also taking a closer look at the countryside, thanks to Cliven Bundy – a man who fought for his farmland.
One British farm, which is just under 500 acres, was sold for £2 million eight years ago. And now? The real estate is worth over a whopping £5 million. Not a shabby investment at all.
Over the last decade, farmland in Great Britain has skyrocketed by over 270%. On average, land is going for£8,500 per acre. London real estate used to be the most sought-after land, but, my, how things have changed…
Farmland’s value increase is more than doubled London’s, which is up by 135% for the decade.
Knight Frank’s head of regional farm sales, James Prewett, explains his reasons for this shocking change:
“It’s been a perfect storm of various factors. There’s the financial crisis where people were looking for something to invest their money into, a tangible and physical asset; agricultural conditions have improved significantly in the last couple of years; and overriding shortage of supply has helped push prices up.”
At a 0.2% rate (per year), Britain’s farmland is shrinking, thanks to infrastructure and housing projects. And since they’re not creating more space for farmland, prices will only soar higher and higher. James Prewett points out that it’s basic supply and demand:
“Well there’s always an obvious opportunity to compare it with what happened in the housing market. All I’d say is there doesn’t appear to be a massive relaxing of supply at the moment. And as long as supply remains tight, I would have thought that prices will remain firm, stable and keep on growing.”
The returns on farming, itself, aren’t very high – bringing in a measly 2% return, which pales in comparison to the 20% return on property. So why is the farmland sector booming? The security and strong capital growth that it brings attract many investors.
Farmland is the go-to gold mine. Not only are private investors taking advantage of the boom, but pension funds are including countryside investments, too. Foreign ownership is pretty low, unlike in the city. In 2013, overseas buyers account for only 8% of farmland sales.
