Low supply, varied demand and uncertainty over the potential impact of Brexit and Covid-19 continue to shape the farmland market in England, according to land and property specialists Strutt & Parker.
The Farmland Database suggests that just 46,000 acres of farmland have been launched on the open market in England so far this year, well below the five-year average, making it inevitable that 2020 will see the lowest amount of land publicly marketed on record.
The average price of land remains remarkably consistent, with the average parcel of arable land selling in 2020 at £9,500/acre (up 5% year-on-year), and the average pasture price £7,200/acre.
What about the sell-on price of your vineyard? Ed Mansel Lewis, head of Strutt & Parker’s vineyard group, spoke exclusively to Vineyard about the state of the market.
“The value of a planted vineyard is the sum of three essential elements; the value of the bare land, the adjusted cost of planting the vines and a premium for the grower’s risk in establishing the vineyard.
“In terms of the base value of suitable land,
this can range from about £10,000/acre to
£20,000/acre depending on the suitability of the site and how competitive the market is in that region. Generally, price competition is highest in Kent, with good competition in Sussex, Essex and Hampshire. Price competition wanes as you get further west or north.
“The value for the cost of planting needs to be adjusted to account for various factors. A vendor can expect to achieve the greatest value where the vines make a wine in strong demand and where the vines have proved themselves over a couple of good harvests, achieving good sugar levels and weight yields.
“The pruning system will also affect the value, as it needs to be a system the rest of the market can work with. Finally, the vineyard needs to have plenty of harvests left in it. Discounts to the cost of planting should be expected if the vines are yet to reach maturity, make unpopular wine, have an unfamiliar pruning system or are at the end of their life.
“Finally, the vendor’s risk is the percentage premium for establishing the vineyard and nurturing it until the point of sale. The size of the premium is strongly linked to whether the vendors have got the first two bits right (right site and right vines). Beware, if the vineyard is planted on an unsuitable site or in an unsuitable way it may attract a negative premium to account for the purchaser’s cost in ripping out the vines.
“As so many vineyards are traded off market there is very little market evidence of vineyard transactions, but vineyards that meet the qualifying criteria above should trade for between £30,000 and £35,000/planted acre.
“At present, we are seeing an increasing number of wine distribution businesses, venture capitalists and hobbyists retiring from the city looking to acquire going concerns, and they expect to pay this per-acre price for a well planted vineyard.”