Scottish farmland market sees early surge in activity
The Scottish farmland market is experiencing an unexpected early surge in activity despite weather-related pressure, as well as economic and policy factors.
According to Savills, the number of acres advertised for sale on the open market to the end of May was 64% higher than for the same period in 2023, and 50% higher than the 10 year average, reaching a total of 14,142 acres. This marks the third highest supply level since 2012, a surprising development given the advere weather conditions throughout winter and early spring impacting the start of the customary launch period in May. In addition, these figures do not take into account private sales of farmland handled by Savills so far this year which accumulatively account for over £50 million of sales.
Preliminary data from private sales and pre-emptive offers show that values for both arable and productive grassland are trending above 2023 levels. This is happening even as interest rates and input costs have risen over the past 18 months.
Two -tier demand
However, according to Savills, buyers are increasingly discerning, placing a strong emphasis on land quality. Prime land, classified as classes 1 to 3.1, remains the most sought-after among arable farmers, achieving £11,000 – £13,000 per acre.
Infrastructure has also become a pivotal factor for buyers. A two tier market is emerging, with robust demand for well-equipped units and adaptable buildings. The escalating costs associated with erecting or repairing large general-purpose sheds or specialized facilities mean that properties with well-maintained infrastructure are significantly more attractive in the current economic climate.
Policy and legislation
The recent cuts to forestry grants are likely to influence market dynamics. The reduction may temper the mandate for planting land which has previously provided upland farmers with roll-over funds for investment, and has significantly supported the rural land market over the past two years.
The latest land reform proposals may be perceived as an unwelcome distraction for some considering either buying or selling, yet recent activity suggests farmland is still considered a solid and attractive investment.
Evelyn Channing, head of Rural Agency in Scotland at Savills, commented: “We have some very good, well equipped farms on the open market, or about to launch: we anticipate that these will be highly contested. In contrast, those farming enterprises of a poorer land quality, or where investment is required, will need to be competitively priced in order to achieve a sale as supply figures increase.
“There are some very committed buyers in the market, so the best properties will continue to sell – and sell well. However, more occasional or discretionary buyers need clarity from the Scottish government over future farming subsidies: this will help farmers enormously in planning for their futures and in making decisions about selling and buying.”