Values for farmland have risen steadily over the last three years and based on this year’s results, the average per acre value for top quality land is now in the region of €15,000 per acre, although there have been sharp spikes this year for certain land sales.
Steadily climbing from the accepted base of €10,000 per acre, the average is now closer to €12,000 for good land, while average land is making from €8,000 upwards. Forestry ground has risen from a low base to around €4,000 in some areas, and demand is good, but the key to sales is the availability or existence of planning permission. Marginal land hovers around the same value level.
And it has been a thriving agricultural market this year — with more agents saying they are busier than ever on land sales, some of it through Nama or receivers, but most of it agricultural and confined to the industry — farmers selling to farmers — they’ve had the field to themselves with the odd blip from the Middle East and USA.
Other notable exceptions include land at Tallow, Currabinny and Kinsale, but these high-earning, high-profile, sales included zoned land, which marked another trend — the re-emergence of a dormant property market and the emergence of land investment once more.
And despite the poor spring, the good summer and sublime autumn saw a steady stream of property on the market and a steady increase in prices as demand seemed increased towards late autumn. It appears to have petered out now for the Christmas season, but sales are continuing nonetheless.
There was sense in the market overall, with good money paid for the right property — good land, in a good area and of good quality, with little work needed. High prices were made, notably where top quality parcels were vied for by neighbours who perhaps had the rarity of another sale in their lifetime at the forefront of their minds.
And where there wasn’t competition, or where land was compromised in some way, the market responded accordingly, giving low prices or a lacklustre response. In many cases, farms just didn’t sell, if they were overpriced or overestimated, an indication that there was little stupid money out there — with the odd exception, of course.
The steady stream of sales gave credence to the contention that demand had been pent up through three slow years in the agricultural land market and, consequently, sales were brisk, with strong prices paid.
In three years, average prices jumped by €7,000 for prime land; while there may have been a large volume of sales in 2013, the movement could be put down to a number of factors, not just the changes in the common market, or a trend towards moving out of agriculture, rather it could simply signify a rise in values to a level which fence-sitting sellers found acceptable.
Several factors push land sales, says Michael Brady, and while selling for financial reasons does come top of the list, the underlying factors are a lot more complicated and not just simply cashing in on the market. If that were the case, he says, land prices would collapse.
He puts the rise of farm sales firmly down to the slump following our economic crash, rather than any great seismic shift in land ownership patterns.
Land ownership changes very slowly in the country with patterns moving slightly over a long period, he says, while pouring cold water on the prospect of the free market as the reason for pushing people to sell up.
“There was subdued activity for the previous three years — that’s what’s pushing sales and if there’s a general sense that people are selling then it’s silly, it’s a trendy thing — if everyone were to rush to sell, then land sales will collapse — and the return on investment isn’t good,” he concludes baldly.
Brady’s contention, boiled down, is that land ownership is an emotional rather than hard-headed thing and the primary driver behind our low level of transactional activity is pride.
Pride keeps men on the land when perhaps they’d rather be elsewhere and it’s why many farmers continue to farm in the face of very poor returns, he says.
And he also pooh poohs tales of investors buying up farmland once more — it’s an exaggerated opinion, he says, and few large investment and pension portfolios will drop fund money for any return less than 10%, he concludes.
Other agents, however, say there is good anecdotal evidence that investors have purchased farm land this year, but in most cases, it bounded large conurbations and for the most part, has a certain element of zoning.
This move, while it may hedge against Capital Gains Tax and inheritance tax, along with offering agricultural reliefs, may account for a small percentage of sales, but cannot be a trend per se, says Brady.
The medical consultant or heavy hitting CEO, whose father or grandfather had a farm, is more likely to invest in land after commercial property and pension fund investments, he says, because the decision has an emotional element.
However, the increase in land prices, the return of interest in zoned land, (usually combined with larger swathes of agricultural land), does indicate a trend — albeit, a calmer more considered return to interest in property once more.
Rising prices reflect pent-up demand and a more optimistic outlook on the back of strong milk prices and a booming agri-business sector, which means the busy selling season looks likely to continue into 2014.
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