Farmland supply was the lowest on record in Scotland during 2020
Demand for farmland in Scotland outstripped supply in 2020, due to a combination of low volumes, an increase in lifestyle buyers looking for smaller holdings and sustained interest in land suitable for tree planting, according to new research from land and property specialists Strutt and Parker.
Analysis of data from the past 12 months shows the performance of the farmland market was atypical relative to recent years, in terms of both supply and demand.
Diane Fleming, farm agent for Strutt and Parker in Scotland, said:
“Spring 2020 brought us the unknown world of lockdown and travel restrictions and prospective sellers were also cautious to commit to selling faced with the additional uncertainties caused by Brexit and whether or not a trade deal with the EU would be agreed.
“Active buyers did not show the same restraint, competing vigorously for those farms available for sale, which saw demand quickly outstrip supply.”
Strutt and Parker’s analysis shows that 82% of farms marketed successfully found a buyer by the end of the year, up 26% on 2019 (however, more farms were marketed in 2019 than in 2020).
In addition, there was also a rise in the number of off-market deals, where vendors chose not to commit to open market advertising, but were prepared to accommodate buyer interest on a private basis.
It is estimated that up to 30% of farms for sale during 2020 were available on a private basis.
In general, competitive bidding was witnessed at closing dates and values above the asking price were achieved, although variable values were seen across different regions and types of land.
Secondary arable values ranged from £3,000/ac to £6,000/ac, with grass leys achieving between £2,500/ac and £5,250/ac.
Overall, farmer buyers accounted for the majority of transactions during the year.
However, forestry buyers dominated when it came to hill ground. Strong prices continue to be paid for land suitable for forestry planting.
Less productive grassland and even marginal arable ground can also attract interest from these buyers.
As seen in recent years, strong prices are continually paid for land with afforestation potential. Tree planting is backed by government support and afforestation commitments, in the quest to attain carbon neutrality.
“Private companies and investors are also keen to acquire forests, plant trees or purchase carbon credits to offset their carbon footprint.”