Could falling land prices lead to the rise of the rural entrepreneur in the South West?
Increasing urban property prices and falling land values could be fuelling a rise in new rural business start-ups, the latest survey by the Royal Institution of Chartered Surveyors (RICS) and Royal Agricultural University (RAU) indicates.
Non-farmers, such as those starting up cottage industries, accounted for 27% of rural land sales in the South West over the past six months according to the RICS/RAU Rural Land Market Survey H2 2015.
By contrast, property developers accounted for only 1% of rural land sales over the same period, a decrease of 4%. Sales to individual farmers rose from 56% to 59%.
Meanwhile, survey respondents have predicted that land prices will fall over the next 12 months with 33% more rural Chartered Surveyors expecting to see prices for commercial farmland fall rather than rise.
RICS Chief Economist, Simon Rubinsohn, said, “While rural land prices have risen over recent years, the global fall in crop prices is likely to cause prices to drop over the next 12 months.
“Added to that, commercial and residential property prices in our towns and cities are continuing to rise. This is likely to make rural land increasingly attractive to those outside traditional farming communities. Already, a quarter of all countryside land is being purchased by non-farmers – lifestyle buyers or hobby farmers – throw all these factors into the mix and this trend is set to rise.”
RICS Head of Policy, Jeremy Blackburn, said, “Start-up businesses do not have to be confined to the trendy streets of East London, Britain’s countryside has a great deal to offer young entrepreneurs. Market conditions appear to be encouraging a wave of new types of rural business and help must be given to support this trend further if our countryside communities are to thrive.
“New entrants to farming businesses continue to face barriers but at RICS we are currently working with the Fresh Start Land Enterprise Centre (FSLEC) which is developing a pilot ‘matching service’ for potential land entrepreneurs, helping to bring together those looking for new opportunities in agriculture with those who have land and rural real estate to let.”
Across all farming sectors, demand for rural land is expected to fall over the next twelve months. In the last half of 2015, 20% more respondents saw a drop in demand for commercial land than saw a rise. Meanwhile while 20% more respondents reported an increase in supply of commercial farmland and 13% more saw a rise in supply of land with a residential component than saw a drop.
