Scotland: Rural Market Update February 2021
Tue 16 February 2021
, Director, gives an update on the Scottish rural land market.
Undoubtedly, one aspect of the agriculture industry that has seen significant change as part of the response to the COVID-19 outbreak has been the rural land market. Lockdown 1.0 came at a time where a number of properties were being prepared to come to the open market, and the obvious restrictions delayed progress and also possibly caused a change in mindset from the potential vendors. The early part of 2020 as understandably quiet, and this was then followed by a surprisingly busy mid-period; not only for the land offered on the open market, but the amount of land offered privately.
Research indicates that throughout the year, there was a sustained demand for expanding farmers, however, not so surprisingly, there was an increased demand for amenity and lifestyle purchases. The recognition that “working from home” could indeed become the norm saw a marked change in interest in rural property from a slightly different sector. The large improvement in rural broadband has undoubtedly facilitated this and certainly brought a new dimension of potential vendors to the market.
While the pandemic has caused obvious problems with the process of property coming to the market, one of the key facts that has emerged is that, once again, there was a reduced supply. Whilst one could say this was solely due to the pandemic, this was in fact a continued trend from 2019.
The above two points have resulted in maintained values for farmland over the past twelve months. There is clearly a continued demand for better quality land, whereas there has been a significant price increase in the poorer quality, more marginal land. This demand has potentially come from the non-agricultural market, looking at the amenity value, but there has also undoubtedly been a significant impact from forestry driven purchases. This is a large potential market with forestry purchasers looking at opportunities of varying sizes, and most certainly a market that needs to be explored if considering a sale.
So where will the market go in 2021? The demand is still there; the thirst was never quenched in 2020; there is still demand from the amenity purchaser; there is further clarity post-Brexit and much more certainty around subsidy.
This coupled with the continued low cost of money, for short and long-term borrowing, backed by the security of land continues to be of attraction. Could the budget in March have a further impact?