Has Brexit created investment opportunities in UK farm land?

Real Estate firm Savills believes that the UK’s decision to leave the European Union has potentially opened up profitable opportunities for overseas investors, writes property development expert Richard Carr.

Farm land

Richard Carr Farm LandAlthough Brexit created some uncertainty for farm land values in the UK, Savills believes that the weak pound creates a favourable buying environment for overseas investors, whilst the reduction of supply may help to support values.

“The full impact of Brexit on all of the UK’s property markets will be very dependent on the macroeconomic background and the evolution of the story over the next two to three years. We must stress it is early days and there are many unknowns,” said Ian Bailey, head of rural research at Savills.

“Uncertainty is the key factor and it is very likely that farmland market activity in the second half of this year will be more subdued as potential sellers wait and see. Our research shows just over 100,000 acres were publicly marketed across Great Britain in the first half of 2016, which was on a par with activity for the same period of 2015.”

Subsides

As a result of leaving the EU, the amount of money received from subsidies to farmers will significantly reduce. This along with the UK’s trade relationships will directly impact upon farm incomes and will create uncertainty for a number of years in the market.

As part of the Common Agricultural Policy (CAP), the subsidies received by farmers represented around 67% of their income, however they reduced over the past couple of years and are playing a reduced role as a driver of land values.

“The fundamental factors driving the value of UK farmland remain. Supply is historically low, the product is finite, there are competing land uses and a variety of ownership motives will all support farmland value growth in the long term,” Bailey said.

Market opportunities

Richard Carr believes those savvy overseas investors will be taking advantage of the weak pound and investing in areas across the property and land markets. Uncertain times can often prove to be the most profitable times to make investments.