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Farm investment reaping rewards
LATEST research by Peterborough-based consultant Carter Jonas has shown that agricultural sites proved to be the best place for those investing in property.
LATEST research by Peterborough-based consultant Carter Jonas has shown that agricultural sites proved to be the best place for those investing in property.The consultants found that the returns in farming property investment last year easily beat those from commercial and residential property.
However, it did not beat gold, which was found to be "best in class" when it came to asset performance in 2008/2009.
Carter Jonas's research team in the city has developed the Model Estate, a theoretical rural estate made up of a variety of in-hand and let farms, as well as commercial and residential properties.
It extends to a total of 3,208 acres and is situated, for the purpose of valuations, within a geographical location representative of many estates within the UK.
While assessing the value of returns on investment in the Model Estate, Carter Jonas took into account the performance of other asset classes, including equities, other types of property, gold, fine wine and antiques - the latter sectors, once considered peripheral, are now increasingly perceived as comparative asset classes to many investors.
The Model Estate produced a 0.5 per cent total return over the last year, including both capital growth and income return, significantly beating residential and commercial property investments, which recorded negative returns.
Antiques and fine wines also fared poorly, but equities and gold proved better investments, with gold producing a most impressive 15.7 per cent annual return in 2009.
Head of research at Carter Jonas Catherine Penman said: "Over the course of 2009, let farms, a key component of our Model Estate, performed exceptionally well.
"A return of 4.6 per cent saw let farms in isolation beat equities, antiques, commercial and residential property investments - as well as the returns from in-hand farms. Despite the current economic uncertainty, our Model Estate research shows that agricultural land is capable of providing strong, and indeed improving returns."
John Henniker-Major, chairman of Carter Jonas and a partner in the firm's rural division, based in Peterborough, said: "Unlike other forms of investment, agricultural land has the advantage of positive benefits under current Inheritance Tax (IHT) legislation, which makes it attractive for investors."
The full Model Estate report is available to download from www.carterjonas.co.uk
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