The English property investment landscape is undergoing a transformation as once-humble farm plots are becoming the hottest property in the land development market.
New research that sheds light on this trend has revealed that in the third quarter (Q3) of 2023, farm plots emerged as the most sought-after land development opportunity with 55.3 per cent of these plots already being sold or under offer, marking a significant increase of 12.4 per cent from Q2 (Table 1).
The bigger picture
According to the research, although demand for farm plot sales has soared, the overall demand for development opportunities across all land types has witnessed a 1.8 per cent dip from Q2, with demand for all land types now standing at 42.7 per cent. This decline is attributed to the falling interest in land-only plots, which decreased by 2.3 per cent. Furthermore, residential development demand dipped by 1.5 per cent and industrial development saw a slight drop of 0.3 per cent.
By contrast, commercial developments defied the downward trend with a growth of 1.1 per cent, raising their demand to 37.4 per cent in Q3.
Why are farms gaining popularity?
Farms have a unique charm that draws in developers. They are generally free from the pollution that mars many urban land plots. Moreover, they usually lack large infrastructures that need to be demolished before development begins. Recently, these plots have also been chosen as ideal locations for large-scale logistics warehouses, with giants like Amazon leading the way.
Diverse opportunities for investors
The land development market offers various opportunities for investors. For example, land-only plots, which allow complete creative freedom for developers, have seen a demand of 43.7 per cent in Q3. Industrial developments aren’t far behind with 37.4 per cent already purchased. Commercial developments have also seen steady interest, with a 36.1 per cent purchase rate.
Residential developments, on the other hand, seem to be losing their allure, according to the research, with demand currently standing at 33.8 per cent. Despite being considered a safer investment, they tend to offer lower returns.
On a regional basis, the North West was responsible for driving the surge in demand for farmland from Q2 to Q3 with a 33.3 per cent increase in demand. This was followed by the North West at 29.3 per cent, Yorkshire and the Humber at 22.7 per cent and the South East at 5 per cent (Table 1).
When looking at current levels of demand for farmland (Table 2), it is Yorkshire and the Humber, with demand of 72.7 per cent that tops the table, followed by the North West (66.7%) and the South West (65%).
Mitchell Fasanya, Co-founder and CEO of Searchland, which conducted the research, commented: “Farmyard developments are all the rage, and this high demand is being driven by the ability to convert these land plots into large logistical sites such as Amazon warehouses. However, growing interest in farms is something of an outlier, as broadly speaking investor demand has cooled since the summer.”
As the market evolves, it remains to be seen which land type will emerge as the frontrunner in future indices.