Co-op land sale may top £150m as rural values in Britain rise sharply

Financial difficulties may have helped to push Britain’s Co-operative Group into selling its farmland in England and Scotland, but the market timing could not be better for one of the biggest UK land sales in recent decades.

While London property prices have grabbed all the headlines, in rural Britain valuations for prime land have shot up at double the pace of prime residential property in the capital in the past decade, as a lack of supply and strong investor demand have combined to create a windfall for farmers looking to sell.

With its 17,808 acres — equivalent to more than 10,000 football pitches and almost 13% of the 139,000 acres sold in Britain on the open market in 2013 — the Co-operative’s sale could run to hundreds of millions of pounds.

While the average value of prime residential property in London has grown by 135% over the last decade, the value of prime British farmland has increased 273% to an average price of £8,500 (€10,300) per acre, according to Savills, which is advising the Co-op on its sale.

At that rate, the buyer would face a price tag of more than £150m (€182m) for the land alone.

“This is one of the most significant agricultural sales in recent years,” said Tom Raynham, head of agricultural investment at Knight Frank, who could not recall another sale of this size.

“I have a number of private investors and funds actively looking for more land in the UK and this could be an interesting option for them,” he said, suggesting a pension fund as a likely buyer.

Co-op’s farming business dates back over 100 years and employs some 250 people in 15 farms and three packhouses across England and Scotland, producing cereals, fruit, vegetables and honey.

The group wants to transfer the business — staff included — to a single buyer.

The sale comes after a crisis at the mutually-owned group’s banking unit, which last Friday announced a loss of £1.3bn (€1.6bn) for 2013.