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Rising land and property prices boost performance of rural estates

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Land offered with asking prices in excess of £185 million brought a successful conclusion to 2013 for national property consultant Carter Jonas – with the forecast of more positive activity during 2014.

Carter Jonas’ annual performance review of the return on investment of a notional rural estate portfolio compared with assets such as classic cars, fine wines, residential and commercial property, showed a 7.8 per cent total return in 2013.

This impressive performance outpaced both the UK residential and commercial sectors and was attributed to the unabated growth in value of agricultural land.

The theoretical property totals 3,208 acres, comprising a combination of in-hand and let farms.

With a total return of 7.8 per cent in 2013, the Model Estate is ranked third of the seven asset classes reviewed, after classic cars (1) and equities (2).

This is two places up from 2012, when it was fifth (behind classic cars (1), equities (2), residential property (3) and gold (4)).

Andrew Fallows, York-based partner responsible for estate management for the national property consultancy, said:

“Whilst the reviving economy may mean that some buyers decide to invest in alternative property assets, the strength of farmland will remain, a fact clearly supported by the just published 2014 Carter Jonas Model Estate report.

“Many buyers see farmland as having lifestyle appeal, an investment with potential inheritance tax advantages and possibly getting them somewhere spectacular to live.

“On the other hand, farmers are also looking to consolidate their existing holdings where expansion will bring increased profitability for a growing family as the next generation comes into the business.

“In these situations they will purchase neighbouring land or similar properties within a reasonable distance of their own and this was a significant feature in the 2013 market.

“Much prime farming property is being sold without ever reaching the open market and for that reason establishing contacts within both the farming community and among likely external buyers is vital.

“The competition among these buyers should also ensure values remain strong.

“The Model Estate report shows that farmland has an impressive five year performance as an asset – and we are confident it will maintain a five per cent average capital growth for the next five years.

“Agricultural land prices in the north continue to rise unabated with values across Yorkshire fetching anything from £6,000 per acre for bare farmland to £13,000 per acre for prime arable land.”

Mr Fallows added:

“Looking forward to 2014 we are confident that as demand continues to outstrip supply, best in class farmland will rise in value and be keenly sought by the farming and non-farming investors alike, who value the safe haven status and inheritance tax advantages that land offers.”

Andrew Fallows (2) small

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