'There's no shortage of investors, land is always in demand,' say top auctioneers
“The number one factor in the rise of land prices is that there isn’t enough land for sale to satisfy market demand,” says one leading auctioneer.
How sustainable these prices will remain is something that only the future will tell us. The last time we saw such strong prices was back in the Celtic Tiger days. Back then, a major driving force was investment, pure and simple; specifically, it was a case of many people investing because of the possibility of turning farmland into development land.
Today, the idea of buying agricultural land for development is a bet that very few would be willing to make. That hasn’t stopped investors buying land, however. Investors come in all shapes and sizes and with a variety of motivating factors and the difference between now and those developer-fuelled times is that the reasons behind the interest in land is more varied.
“The number one factor in the rise of land prices is that there isn’t enough land for sale to satisfy market demand,” points out Mike Brady quite succinctly. “Another factor is that dairy farmers had an excellent year last year and a third important factor is that tax and investment advisors have been having a strong influence on the market…”
For Midleton-based auctioneer David Keane, the appetite for land is continuing and he doesn’t see that appetite abating any time soon. For so many people, farm land still represents a solid investment.
“For example, we have two very different farms on the market at the moment – both of them getting a good deal of attention,” says David. “One of them is Ballyspillane East, which is 36 acres. There are already offers on that one.
“There’s no doubt it – there’s great interest in land and it’s coming from various sources… you have both investors and dairy farmers actively buying. The whole area of nitrates control regulation is like a new milk quota.”
For those investing, the returns from lodging money in the banks are still slim, meaning that investors will continue to seek land. While from the dairy farming point of view, the nitrates issue and the continued success of the dairying sector mean that both of these main driving forces will keep sustained upward pressure on land prices.
“There seems to be a lot of money available to buy land because what you get from leaving your money in the bank still isn’t worth talking about,” says David. “A lot of non-farmers buy the land and let it out again.”
And is it going to last?
“There’s no fear of land – it will always be wanting,” says David, positively.
“How long it will last, I don’t know,” says Michael Brady, somewhat more philosophically. “It’s capitalism… The land market did nothing from 2012 to 2018 and it’s been steadily rising ever since. In 2006, I couldn’t see the land market coming back as strongly as it has now. With a bit more experience and the longer I spend looking at the agricultural land market, the more I see that these things are cyclical.”
