Land is the only part of the property market where prices have begun to rise. As 50 acres go to auction today in Enfield, EMMA CULLINANreports, and CONOR POWERlooks at prices in Munster
THE PRICE of land, which fell from a high of €20,000 per acre nationally in 2007 to €8,000 in 2010, began to recover in 2011. Agricultural land remains the only section of the property market that has come back to the right price level since the crash in property prices in 2007, Society of Chartered Surveyors Ireland (SCSI) vice-president Roland O’Connell said this week,
“This is primarily due to our strong food export market and also the fact that many purchasers felt land was a safer alternative to putting savings in the bank.”
Farmers, no longer having to compete with developers, are re-entering the market, and many are looking forward to the opportunities offered by the ending of the milk quota system in 2015.
Agent Knight Frank has put an AMV of €450,000 – €9,000 an acre – on 50 acres of land in Enfield, Co Meath, opposite the Johnstown Hotel on the edge of the village.
Agents selling farmland are cautiously optimistic about the market. “Farmers are in a position to buy now, whereas before they were competing with developers,” says Clive Kavanagh of Paddy Jordan Estate Agents in Newbridge, Co Kildare.
Farmers were bidding against buyers from a business background before and weren’t able to compete: it would be difficult to make a profit from farming if you spent €20,000 to €30,000 for an acre of land.
“One of the driving forces behind the price hike was the increase in personal wealth in the country which prompted many businessmen to purchase 40- to 60-acre farms as a lifestyle choice,” says a report by agency Savills, whose country division has specialised in farmland since 1935.
“In addition, there was incremental selling of small tracts of agricultural land for development purposes.”
At its peak, Irish land was among the most expensive anywhere in the world – as was realised when developers were paying more for land in Dublin than they were in Tokyo – and it still is expensive, along with The Netherlands, Denmark and Northern Ireland.
Land in some counties, like Wicklow and Kildare, command higher prices than others.
“Throughout last year there was about a 6-8 per cent growth in prices although high-quality farms at the prime end of the market would have gone ahead of that,” says David ashmore of Savills.
Robert Ganly of Knight Frank says its figures show a nationwide average of €8,776 last year; the latest figures price agricultural land at €10,064, a rise of 14 per cent. It has taken the market a while to settle, says Ganly, “and 2011 prices are more realistic”.
He points out that while developers were pushing up land prices, farmers were selling at these prices and now some of them have this money to invest. Plus, with the price of cattle and sheep high and following a good harvest, farmers have the confidence to buy land, says Ganly. But while average prices have been creeping up from the lows of 2010, some regions have fared better. In Kildare, says Kavanagh, prices rallied to €12,000 and €13,000 last year but now seem to have settled at around €10,000, a price that buyers and vendors accept is realistic.
Another reason why prices are expected to remain healthy is that you will rarely see high volumes of farmland for sale at any one time. Indeed, as Ashmore says, agents won’t be able to predict what the market will do exactly until they see what volumes come up for sale. Both he and Ganly have seen the levels of transactions growing.
Kavanagh, too, says a problem he foresees is getting enough land for sale. He says that Paddy Jordan sold two farms just before Christmas, a 270-acre farm in Nurney, Co Kildare, that made €2.64 million, and a 157-acre farm, near Kildare town, for €1.5 million – “and there were any number of buyers for them,” he says. “There are plenty of farmers who want to expand and reinvest and at €10,000 an acre it makes a bit of sense.” The Nurney farm came with a farmhouse that needs a lot of work, says Kavanagh, but in properties like these he finds that the house is of no consequence to the buyer and its price gets bundled up in the land price.
So now that developers have generally left the market (although some non-farmers still buy land as an investment, to lease out), have there been cases of farmers buying development land? Yes, says Kavanagh, who sold 35 acres in the town boundary of Athy, which had been zoned industrial and had full planning permission for a warehouse scheme. “It made €16,000 an acre so was a slight premium above agricultural values although it will be used for agriculture – it was bought by an adjoining farmer.”
Now there’s a real example of the turnabout in our economy.
Enfield farm
THE PIECE OF land in Enfield, Co Meath, that will go under the hammer this afternoon measures 49.55 acres and is guided at €450,000, or €9,000 an acre.
"The sale will be of interest to both observers and participants in the property market as it will give an early indication of the shape of land prices for this year, says selling agent Knight Frank.
The land is on the edge of Enfield village between the M4 motorway and a relief road opposite the Johnstown Hotel, where the auction will take place at 3pm. The property is divided into fields, and has extensive road frontage, mature trees and natural hedging. It is all in permanent old pasture and described as good quality ground.
Cautious optimism in Munster
In the Munster region, a strengthening agricultural sector is causing cautious optimism in the property market .
“I would say that prices are holding their own,” says Anthony O’Regan of the Cork offices of Keane Mahony Smith auctioneers. “Land never went off the Richter Scale in the way that some property prices did. Whilst prices may have fetched €20,000 per acre at one stage, they would have been exceptions rather than the rule . . . Prices now are usually governed by factors like buildings going with it and convenience of access, as opposed to such things as entitlements or milk quotas.”
The Europe-wide milk quota system that limits the annual output for liquid milk production will be gone in 2015, allowing for growth potential that hasn’t been possible for many decades. Ireland’s dairying industry possesses a combination of natural advantages and focused, well-funded research and development that is due to leave our dairying industry in a uniquely promising position when the new agricultural market becomes a reality.
“Land prices are steady and climbing,” says Éamonn OBrien of land specialists CCM auctioneers. Based in Mallow in the heart of the Golden Vale, he notes: “We’re finding over the last two months or so that prices are strengthening and we’re getting opening offers at the level where we would expect to be finishing at.”
The demand appears to be strongest for the smaller-sized holdings (ie, anywhere from 10 to 30 acres) and for the far rarer holdings of viable self-sustaining proportions (over 120 acres). But a recent public auction by Spratts Auctioneers in Dungarvan saw a 57-acre holding near Lismore in west Waterford sell for over €14,000 per acre.
Farmers have had two good seasons in a row, leaving many in a cash-rich financial position. Another element thats particularly evident in Kerry, according to Killarney auctioneer Tom Spillane, is that the public listing and subsequent growth of former co-operatives such as Kerry Foods have also left certain sectors of the farming community with a war chest of sorts that is being used with cautious optimism at the present time.
“Many farmers are starting to find their feet again and if a farmer gets a hint that things are going well, they’ll come out and try to be ahead of the posse,” says O’Brien, who also observed that at a recent farmers’ conference he attended, commercial banks were once again present; courting the interest of the agricultural sector that had for so long been playing second fiddle to the property developers during the height of the property bubble.
We are, perhaps, living in a time where people continue to turn back to the land.
“People that have money are more nervous than people that owe it,” notes OBrien philosophically. “And many people feel more secure putting their money in a ‘land bank’ rather than in a commercial bank.”
