To further our understanding of the strength of demand, we track the speed of transactions in the farmland market by looking at whether farms have been sold, are under offer, are still available or have been withdrawn from the market. We examined the sales status on 30 June 2021 of all farms publicly marketed during 2020. This analysis shows that three quarters of the land that was publicly marketed in 2020 has now sold or is under offer, which is the highest proportion we have seen in the past five years. The majority of the sold farms also achieved more than their guide prices – which is the highest proportion for six years. Initial data also points to over 70% of the farms and estates launched in 2021 which have already sold, selling for above their guide prices.
These figures all highlight the continuing firm demand for farmland. Demand is robust for all types of farm and in all regions, apart from the North East where half of the farms marketed are still available or have been withdrawn. Location is key, with properties in areas popular with lifestyle buyers or private investors seeing the strongest demand.
Looking at buyer type, the proportion of farms bought by farmers has dropped close to its lowest level since our survey started over 20 years ago, at 53%. Conversely, the proportion bought by lifestyle buyers and private investors has risen to its highest level – accounting for 45% in 2020. Non-farmers are now the main type of buyer in the south east and south west of England.
As reported in the previous quarter, green investors are becoming more visible in the marketplace and are increasingly bidding on farms. Some of these buyers are individuals, but others are funds looking at land as a sustainable investment that meets Environmental, Social and Governance (ESG) criteria. These new entrants are feeling their way into the market, as it is not yet clear what the potential returns from carbon credits and ecosystem services might look like. We are sensing that there may currently be a cap on what these ESG buyers may be willing to spend, with one sale recently seeing ESG buyers outbid for land which was eventually secured by a buyer interested in its sporting potential.
Figure 5: Speed of land transactions - % of farms sold (exchanged)
N.B. Data shows the sale status by number of sales, not acres. Data captures the sales status on 30 June of land marketed during the previous year, so that the land has had time to sell. Privately marketed farmland has been excluded due to the difficulty of collecting comprehensive information.
Figure 6: Buyer type
N.B. Data is by number of sales, not acres. The year is when the farmland was sold (exchanged) and is for whole years unless otherwise stated.