PRIME arable land and mixed arable and livestock farms over 300 acres have proved the most buoyant sector of the Scottish farms market in 2016, according to estate agency Strutt & Parker.
Just over 100 commercial farms (in excess of 100 acres), extending to 36,000 acres in total, came to the market with an average asking price of £1.45 million.
James Butler, partner in Strutt & Parker's Edinburgh office, said: "Mixed and prime arable farms were the most sought after with demand outstripping supply. There was a clear demand for larger farms with 70 per cent of those over 300 acres sold in comparison to 43 per cent under 300 acres. The greatest success lay in 300 to 400-acre farms with 84 per cent finding buyers.
"In terms of price, the market was dominated by a greater number of lower priced farms (£750,000 to £1.5m) and this sector had the greatest number of buyers.
"However, the more expensive farms (£1.5m and above) were most likely to sell due to increased profitability and limited supply, with a greater proportion of success in this area of the market.
"During the year there was a number of very competitive closing dates with excellent prices paid. These occurred where the farm was widely promoted and competitively priced. The main reason for farms remaining unsold is an over-inflated asking price set at the start of the sale process."
Mr Butler said an emerging trend this year was a much more pronounced focus on the attributes and set-up of a farm when it came to the end value.
He explained: "Imagine two adjoining parcels of land with a similar acreage - one is ring-fenced with no exclusions, well-equipped and with Basic Payment Entitlements; the other has none of these advantages, ie, it is split up with exclusions, poor access, fixed equipment requiring investment and no entitlement to Basic Payment.
"The bare land value of these two farms would have varied considerably in this year's market, more so than in previous years, making it impossible to generalise about average arable and pasture prices on a national scale.
"This trend means that more detailed consideration and expertise is required than ever, when it comes to valuing a farm."
Mr Butler concluded by saying: "Retirement was behind the majority of farm sales while the most active buyers were Scottish and English farmers planning to expand their business with an emphasis on better quality land in a more favourable climate. Investors and institutions have become less active due to the wider economic climate. Almost all buyers were UK-based and remain active regardless of our position in Europe."
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