October 14, 2011 10:00 pm

Playing the fields

Booming values in commodities such as wheat mean a swelling in the ranks of lifestyle farmers

The smell of manure may never be so sweet as for the modern lifestyle farmer: the landowner with a job in London who enjoys home-reared pork and homegrown apple sauce.

This is especially true for those whose tastes run more commercial, given that values of tax-efficient investments in farms outperformed most other asset classes, having doubled in the past five years.

Booming prices of commodities over the past decade have underpinned values across the world for canny land investors. However, according to Ardeshir Naghshineh, a commercial property investor turned farmer, the enjoyment is often found in apple juice to give your friends at Christmas. Or, to be accurate, the 2,000 bottles of apple juice that needed to be sold promptly. It beats the runner beans and tomato plants that most can boast about over Sunday lunch.

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The juice – just 10 per cent of the crop in 2009 before he turned the orchards over to pick-your-own – was sold to a supermarket ahead of the disposal of the Norfolk farm itself, which was put on the market for £5m this summer.

Naghshineh is in many ways typical of the second-vocation farmer who wants the status and produce of the land along with the chance of a significant profit. The land comes with a Grade II* manor house that once belonged to the family of Anne Boleyn – and still carries their crest – as well as the orchards and land to farm wheat, spring and winter barley and grass ley. Meadows and parkland provide grazing for beef cattle.

The opportunity to make money was crucial. He employs three people to manage the farm, which was always run as a business. “I wanted to create a mixed-use organic farm,” says Naghshineh. “Farm prices are so strong at present and people are interested in such assets to put their money into given the stock market turmoil.”

For a gentleman farmer this sort of home would be more than enough of a retreat, allowing the enjoyment of the turning of the seasons more for being able to do less. Indeed, agents say the market for farms for part-time owners tends to be confined to the south-east in the UK, within an hour’s drive of London, as well as in France and Italy.

Richard Binning of estate agents Savills says: “Lifestyle farms are still selling well. We have recently sold Model Farm outside Oxford well over guide price, though it has been on the market for only a month. Lifestyle farm buyers are looking for 200-300 acres. They want privacy, somewhere to keep horses, a small family shoot, and often exposure to agriculture.”

Global comparative land pricing data
Average price ($)  

Olive Grove $/hectare

 

Farmland $/hectare

 

Vineyard $/hectare

 

Price of five-bedroom farmhouse with 20 hectares

Chianti, Italy 27,000 20,385 128,000 3.4m-8.2m
South-east England   23,563 32,000 3.1m-7.8m
South Africa (Western Cape)   82,000 127,000 508,587-3.2m
Provence, France 477,015 10,222 136,322 5.4m-8.1m
Dordogne, France   10,876 642,000 2.7m-4.1m

According to data compiled for the Financial Times by estate agents Knight Frank on lifestyle farming, prices for farmhouses are highest in Chianti in Italy, followed by Provence in France, the south-east of the UK, the Dordogne in France and then the Western Cape of South Africa. Properties that recently came on the market include Les Alpilles in Provence, a six-bedroom property with 30 acres of olives that are pressed and sold to Harrods. Elsewhere, Château Saint Aubin comes with arable land to grow wheat, maize, sunflower and barley as well as vines and grazing land.

Pig

Some property is sold with a contract to outsource the farming, such as Kirkbanny Farm in the UK, which is due to be sold this month for more than £1.3m. A contracting farming sale, according to James Denne of Knight Franks’ office in Lauder, Scotland, can be tax efficient, as well as allowing the owner to enjoy the house but not worry about farming duties.

The Cotswolds is attractive given its proximity to London. As a result, prices can be double those elsewhere. Irayne Paikin has turned a house in the Cotswolds into a working farm of more than 200 pigs and a herd of pedigree cattle. She started with low technical knowledge – finding pig breeds on Google – but is now the producer of award-winning sausages and meat. “It is the most amazing learning curve. From researching 18th-century sausage recipes to courses at River Cottage, from sourcing packaging to building a website – it goes on.”

Other estates carry fishing rights that are as attractive to keen anglers as they are to investors given the potential to lease stretches of the bank to tourists, in particular in Scotland, where the rivers in Caithness and Sutherland prove prolific.

Other buyers have turned their land into businesses as diverse as making vodka and ice-cream. Vineyards have also proved to be a draw. Knight Frank is selling Murlingden in Lamberhurst, Kent, a £3.25m early-Victorian house that comes with a hobby vineyard that can produce up to 400 bottles of sparkling wine.

Murlingden, in Lamberhurst, Kent, £3.25m

Murlingden, in Lamberhurst, Kent, £3.25m

Larger farms in the UK normally attract the interest of more serious investors who have little interest in just living off the land. Strutt & Parker agents say investors from non-farming sectors will pay significant premiums to purchase land for investment and inheritance tax advantages. Farmland can be exempt from tax on property valued at more than £325,000 under agricultural property relief.

One potential drawback is that prices have shown signs of plateauing after tripling in a decade. Most agents believe this to be temporary, however. Smiths Gore estate agency predicts another 7 per cent growth in values during 2012 and 2013, for example.

For most lifestyle farmers, however, land prices are a smaller concern than being able to hand out home-produced goods to family and friends. And with the autumn browning the leaves and sweetening the fruit on the trees, there is now expected to be a last flurry of sales before winter.

Daniel Thomas is the FT’s telecoms correspondent

Gillian Tett: The real bull market

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Details

● Savills www.savills.co.uk, tel: +44 (0)1865 269000

● Knight Frank www.knightfrank.co.uk, tel: +44 1578 722 814

● Strutt & Parker www.struttandparker.com, tel: +44 (0)20 7318 5171

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