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Chinese buyers move in on UK farmland market

By Juwai, 06 July 2012
Chinese buyers, whose interest in foreign farmland has raised hackles from Argentina to Australia, have turned their attention to the UK – although for investment, rather than food security, reasons. reports. July 5, 2012 -- Knight Frank, the UK-based property consultancy, said it was, for the first time, "starting to see genuine bids" from Chinese investors wanting to buy UK farmland. However, these were offers from private investors, rather than the funds whose appetite for large swathes foreign farmland has often met with controversy, largely for fear of growing food for shipping direct to China, and so denying the local market. "These are personal Chinese buyers doing it for investment," James Prewett, a regional head of farm sales for Knight Frank, said. "It is different to a fund trying to buy 20,000 acres in East Anglia." 'Little piece of England' Indeed, buyers are interested in smaller farmers, of £1m-2m, which "is not a big chunk of money" for a market in which the average value of agricultural land hit a record £6,295 an acre in the April-to-June, according to Knight Frank, with some lots going for £10,000 an acre. Nonetheless, Chinese bidders had, even in losing out so far on auctions, including for a farm in Buuckinghamshire, helped lift the market by bidding up prices, and could become an increasing force, depending on whether more follow. "It could be a flash in the pan, or it could be part of something longer-term. It is too early to tell," Mr Prewett told The incentive for the Chinese bidders appeared to be, as for other buyers, to tap into UK farmland's tax incentives and status, besides its record as a safe investment in difficult times. Often, Chinese interest in farmland appeared to develop from buying residential property in London, and "then want a little piece of England", Mr Prewett said. Flight from risk UK farmland prices rose 3.7% in the latest quarter from the quarter before, their fastest growth in two years, boosted by its record as a relatively secure investment. "The ongoing economic troubles in the eurozone and other parts of the world only seem to enhance farmland's reputation as a safe-haven asset," Andrew Shirley, Knight Frank's head of rural research, said. The consultancy forecast land values rising a further 4% over the rest of 2012.