Land market retrospective and outlook


With the holiday season a distant memory, we at Aberdeen & Northern Estates are very much back in the thick of it and looking forward to another busy year. However, we’ve taken a moment to look back at 2017, which was a year during which the resolve of the rural sector was tested in the face of growing uncertainties.
We’ve spoken about these uncertainties before – namely a series of significant parliamentary elections and referenda, in combination with mounting industry pressures in recent years. These factors were a constant backdrop to the rural property market last year and tempered the enthusiasm of those looking to buy and sell.
Nevertheless, it was a successful year in which we sold 40 rural properties extending to just under 4,000 acres. These figures are an increase on the year and could point to the increasing optimism of both buyers and sellers. It also highlights the resilience of the rural sector in the North East, which is at odds with the picture often painted by agents reporting at a national level.
The North East buyers’ outlook certainly seems to look ahead, past the relatively short-term uncertainties of Brexit etc., and take the view that the combination of the right property and favourable borrowing rates is a unique opportunity that will stand the future of their enterprise in good stead. Furthermore, the rural property market in the North East continues to represent good value for money to those outwith the area and South of the border.
Whilst there is now a persistent mood of caution in the market, we are still able to hold closing dates for attractive properties where a level of competition has emerged. Last year, the top premium we saw offered at a closing date was over 50% above the asking price for a large equipped farm property. This type of property, as well as good quality, unequipped arable land, continue to be met with relatively strong demand.
However, we also saw a good trade for smaller rural properties develop during 2017, which is a property type that had been met with suppressed demand in recent years. One particular property, which appealed mainly to the smallholder and equestrian market, went to a competitive closing date producing a top offer at 25% over the asking price.
We are delighted to have been able to conclude a good number of sales in the past 12 months in this manner, but we cannot escape the fact that we are partly reliant on strong local demand and neighbouring interest in driving premiums. This has the potential for all property types, across the region, to lead to low demand where that local interest does not materialise. This is most pronounced in more remote locations and/or for equipped land of a more marginal nature.
We are witnessing a growing trend of owners, who are considering selling, attempting to hedge their bets by entering directly into negotiations with neighbours and land owners in their vicinity. Superficially, this may appear to save the time and cost involved in marketing the property, but our advice is always that the benefits wrought out by a public marketing campaign will outweigh any perceived savings.
And so, our trusty mantra continues to apply – price realistically and sensitively, market effectively and the interest generated will let the property find its real value in the marketplace. It is this approach that differentiates us from our competitors, and we take great caution to avoid over-pricing, which is something that can stall a marketing campaign from the outset.
Looking ahead to 2018, we anticipate that the status quo will remain. Brexit still looms large, and things are not generally getting any easier for rural businesses. However, we expect a degree of optimism to remain and the resilience of both buyers and sellers to be undiminished. We’ve already held two closing dates during January, despite what is traditionally a quiet period. Furthermore, we’ve several properties that we are preparing to bring to the market shortly, comprising a range of property types.
We anticipate values to remain steady, broadly reflecting the rates achieved last year (see table below). The investment qualities and flexibility of the best arable land in the region may well strengthen this part of the market, leading to a widening gap between the best and most marginal of land types. Looking specifically at equipped properties, we expect the trend to continue, whereby purchasers generally place more emphasis on the land element of the holding, over and above the buildings and residential elements.
Ultimately, targeted advice is key, and we are more than willing to discuss the market in more depth with anyone who is thinking of buying or selling in 2018.
Land Type Value Range Observed in 2017
Prime Arable £5,000+ per acre
Arable £3,000 to £5,000 per acre
Permanent Pasture £1,500 to £3,000 per acre
Rough Grazing £500 to £1,500 per acre
Hill £200+ per acre