Agricultural land values in Britain climbed to a record in the first half as higher livestock and grain prices encouraged farmers to increase production, the Royal Institution of Chartered Surveyors said.
The average cost of an acre of bare land, terrain without built structures, rose to 6,115 pounds ($10,100) from 5,846 pounds at the end of 2010, the fourth straight increase for a six-month period, the London-based group said in a report today. Prices have more than doubled in the last five years, RICS said.
“Many commercial farmers appear more keen to expand their businesses than sell their land,” spokeswoman Sue Steer said. “This can only lead to even higher prices over the next 12 months.”
Prices for British-grown feed wheat traded in London have climbed 11 percent during the past year, while reduced swine and cattle herds lifted meat prices by 7.2 percent in June from a year earlier, U.K. National Statistics data show. Higher prices for food and other commodities will probably continue to bolster land values, according to Steer.
Arable land appreciated by 4.9 percent and pastures by 4.2 percent an acre since the end of last year, according to RICS.
The report showed both the number of transactions and acreage sold fell, while brokers said demand for agricultural land is also being driven by investors seeking a refuge from turbulence in global financial markets.
“Land alongside gold remains the prime asset class identified as a safe haven in the still turbulent market,” said Richard Liddiard, a partner in the Newbury, England, branch of real-estate broker Carter Jonas LLP.
Farmland values have risen threefold in the past decade, outstripping gains for all other U.K. real estate, according to a report released last month by Knight Frank LLP. Rising crop and livestock prices mean that in the years ahead land values will continue to go up, the real-estate broker said.
Prices of farmland that includes housing rose 5.9 percent in the six months to 7,479 pounds an acre, according to the RICS report. While at historic highs, the rate of growth for prices of bare land and for farmland that includes structures mark a slowdown compared with the second half of 2010, when values rose 6.8 percent over the prior six months, the report showed.