Daniel Rees, head of farm agency for Savills in Wales, discusses the state of play in the market and prospects for the rest of the year and beyond

The farmland market in Wales has seen a strong start to 2021 with a good supply of farms.

A total of 3,215 acres were publicly marketed for sale between January and the end of March – 47 per cent more than in the first quarter of 2020. This represents the strongest start to the year in more than two decades.

These figures buck the trend across Great Britain, which is running at a five-year low in supply, and is the continuation of a theme we saw developing last year, following the general election.

The Covid-19 pandemic, of course, caused some disruption, delaying launches during the first half of the year, however overall supply in Wales was very good, and pent-up demand ensured a lot of interest.

Despite the uncertainty caused by Brexit and agricultural policy reform, values have and continue to remain firm, highlighting the underlying confidence in rural investments and the ongoing resilience of the sector.

Who is buying?

Demand for lifestyle and residential farms in Wales has been growing steadily in recent years, however this accelerated as a result of the pandemic.

Over the last year we have seen remarkable interest in residential and amenity property at all scales. This is borne out by the latest residential analysis from Savills which shows lifestyle choices continue to drive the more discretionary markets.

The £2m+ country house market remains the star performer, with 2.9 per cent growth quarterly and 8.8 per cent annually across the UK.

Another buyer type of note is the environmental or conscientious buyer or investor, looking for green assets. There is a strong belief that natural capital will become a profitable investment in the coming years which is also prompting investors chasing financial returns to get in now, ahead of the curve.

Farmer and commercial buyers were undoubtedly more cautious last year, however the trade agreement between the UK and the EU provided a welcome confidence boost and as a result, we are starting to see more activity on larger farms and blocks of land.

We have agreed sales on a number of farms already this year (dairy, mixed and livestock) and have offers in on a number of others which is encouraging. Now the ground is more accessible and crops are maturing we may well see a few more farms of this type on offer.

What next?

Despite possible short-term disruption caused by the transition period and the post-Brexit trade environment, Welsh farmland will continue to be an attractive multi-purpose asset and with that in mind we expect average values to remain stable as pent-up demand filters through the market.

Farmer buyers will be in the frame for good quality commercial farms, blocks of land near to their existing base or opportunities for beneficial relocation, and we continue to see great interest in property with strong amenity or environmental value.

Looking further ahead, environment is an important theme and there is growing discussion over the direction of farmland values in light of subsidy reform plans and the post-Brexit trade environment.

December’s Welsh Government White Paper set out proposals for a Sustainable Farming Scheme (SFS).

The proposals pave the way for an Agriculture (Wales) Bill which is expected to be introduced into Welsh parliament before summer 2022. While a launch date for SFS has not been proposed, the Welsh government’s view is that the environmental challenge requires decisive action so any transition is likely to be short.

The emerging policy is clearly geared towards sustainable food production. The pandemic has increased the profile and importance of UK food production and so any policy that helps champion Welsh produce alongside its sustainable farming methods will hopefully help Welsh farming and the environment they exist in at the same time.