Danes quit UK for home after land prices tumble

Farmers Weekly Interactive | 10 December 2010

Suzie Horne

Some Danish farmland investors are quitting the UK after seeing land prices rise here and tumble at home over the past few years.

Prices in Denmark have fallen by up to half just since 2008 and agriculture there is under great pressure, said Christopher Miles of Savills.

While there is by no means a wholesale exit by Danish investors, Savills has handled six sales for Danes so far this year.

Many Danish investors bought land here between 2005 and 2008. Since then, changes in the relative values of currencies have wiped out much of the gain they have made from their UK land price rise. However, the drop in Danish land prices means it is still worth some of them reinvesting at home.

"The currency effect is undoubtedly deterring some others," said Mr Miles. "Although some bought at £3000/acre, most bought at around £4000-5000/acre.

During this period, the Danish Krone was consistently around 11 to the pound. But by the end of 2008, it was less than eight to the pound and is around 8.8 today, which is still a 20% difference.

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"As the majority converted their cash to pounds when they bought, if they sell and want to take the money back to Denmark, they are instantly 20% worse off by converting back to Kroner.

"When you take costs of acquisition, stamp duty and cost of sale into account, the position is exacerbated. So, unless they want to buy more assets in the UK or have pressing family or financial reasons, most won't sell."

There are plenty of buyers looking to snap up any commercial farms that the Danes do put on the market. UK-based farmer, private and institutional investors have more recently been joined by Germans and Italians fearful for the future of the Euro and looking for a safe haven for their funds. Bidwells has also recently acted for Indian buyers of UK commercial farmland.

"They have bought bare land in lots in Cambridgeshire and are looking for more," said Bidwells' Ben Taylor, who also knows of Danes and Germans who are considering cashing in their UK farmland investment gains.

"We've got such a strong list of potential investors, it's a sellers' paradise at the moment," he said. A deal between France and Denmark meant it could be advantageous from a tax perspective for Danish farmland investors to buy in France rather than at home, said Mr Taylor.

Andrew Pearce of Chesterton Humberts is also aware of several Danes who are looking to sell in private deals and, like other agents, has plenty of investors from outside farming looking to include land as a secure home within a spread of investments.
  •   FWI
  • 10 December 2010
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