The number of acres launched to the open market in Scotland so far this year remains low, but a recent flurry of activity has seen supply start to recover.
In addition, private sales are proving popular, as in other countries in the UK, meaning overall volume is at a healthier level.
Values remain strong and in some cases demand from non-farming buyers has even seen more marginal blocks outperform arable land.
See also: Land in your area 2021: Scotland
Diane Fleming, Strutt & Parker associate director, said: “Not long ago, we were worried that the prediction we had made at the start of the year – that the supply would recover close to pre-pandemic levels – was not going to materialise.
“However, we can now report that 15,300 acres have come to the open market so far this year, and half of this acreage came to the market in only the past six weeks.
“This has been an encouraging recovery and will be welcomed by the ever-increasing rise in demand from purchasers.”
Although supply is still about 28% below pre-pandemic levels, a greater number of farms have been offered for sale off-market during the past six months, suggesting that, overall, the total number of sales is back to more “normal” levels, said Ms Fleming.
This off-market activity includes all farm types and locations, but is particularly prevalent in farms and land suitable for afforestation.
Farmers continue to make up the majority of buyers, but competition is plentiful.
Forestry purchasers are on the rise, international buyers have re-emerged and lifestyle buyers are still interested, despite the Covid effect waning slightly.
Land values remain strong, ranging between £4,000 and £20,000/acre, depending on location and quality, with hill land suitable for tree planting selling in excess of £6,600/acre, according to Strutt & Parker.
However, values are not expected to rise significantly further due to various factors, including proposals for a second independence referendum, changes in Westminster, and the increase in living costs.
“Farm commodity prices are up, but input costs have risen, too. If, as predicted, interest rates rise higher than 2% by 2023, there is a risk we may see some downward pressure on land values, as purse strings tighten,” said Ms Fleming.
“Against this backdrop, we have seen some farmers looking into retiring slightly earlier than planned to take advantage of the strength of the market and get ahead of this possibility.”
Mixed enterprise interest
The demand for good-quality units, farmland and bare planting land across Scotland continues to be robust, said Duncan Barrie, partner at Galbraith.
Productive arable land is highly sought-after and will typically sell very quickly, he said.
Land with the potential for commercial timber production or native woodland planting and land suitable for developing a tourism business or retail outlet also attracts considerable interest.
“Outwith mainstream farming businesses, there is now significant demand for land for tree planting from buyers with natural capital interests, although these two groups of buyers are not necessarily distinct and many buyers are looking to develop a mix of core farming and other agri-business, leisure or renewable energy interests,” said Mr Barrie.
Supply is still much lower when compared to pre-Covid levels, but this is now beginning to ease.
There continues to be significant amount of land trading privately – particularly at the more marginal end of the market in relation to carbon offsetting purposes.
Despite rising input costs and the recent increases in interest rates, the forecast for the rest of the year remains one of sustained activity, according to Mr Barrie.
What’s on the market?
Strutt & Parker is selling a block of 100 acres of productive Grade 3 farmland with residential or commercial development potential at Brewsterwells, near St Andrews, for £600,000.
The land is suitable for arable production and is currently down to pasture with some young mixed woodland.
Crumstane Farm, near Duns, is on the market with Galbraith as a whole or in two lots, guided at £1.12m.
It includes 103 acres of Grade 3 pasture and arable land, a C-listed five-bedroom house and a traditional B-listed steading with a range of buildings.