Greater political certainty could boost farmland market, say agents
PUBLISHED: 11:55 17 January 2020 | UPDATED: 12:04 17 January 2020
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An upturn in fortunes has been predicted for the East of England's farmland market as a result of greater political certainty.
Rural experts at Savills say location, quality, infrastructure and potential for alternative income streams will remain the main influence on land values throughout 2020 and beyond.
The firm's annual forecast suggests that despite Brexit bringing a great deal of regulatory change, the parliamentary majority won by the Conservatives at the general election will offer more continuity within the agricultural sector.
As a result, it says the rural economy is expected to be more likely to perform positively in the five years ahead - at least, once the first Brexit hurdle of the January 31 withdrawal deadline has been cleared.
Christopher Miles, from the rural team at Savills Norwich, said: "With uncertainty expected to ease over the short to medium term, landowners will be reassessing growth options. The likely restructuring of agricultural payments will put pressure on returns from farming and force the hand of some sellers who are unable to invest or restructure. This is expected to bring a variety of land types to market.
"The prevailing low cost of funds and a volatile global trade market may also attract a greater number of buyers, providing other investment objectives are met. In all situations, upside potential is predicted to be greater than any downturn.
"The current volatility of the pound will likely boost this sentiment, with interest expected to be high from overseas investors seeking to take advantage of a favourable exchange rate.
"Around half of our transactions of farms over 500 acres in 2019 were to overseas investors making the most of the weak pound and showing confidence in the UK as a safe haven. The shortage of supply also led to an increase in buyers from across the country prepared to relocate to the east."
Emily Norton, head of rural research at Savills, added: "The election of a Conservative government signals a move to freer trade and higher environmental protectionism, but with budgets protected for the duration of the next parliament, landowners and occupiers may take additional comfort that policy evolution will be gradual rather than sudden."