UK RURAL investment recorded a total return of 5.5 per cent in 2015, a decline from the total return of 10.4 per centin 2014, according to the IPD UK Annual Rural Property Index, sponsored by Carter Jonas, and published by MSCI Inc, an independent provider of research-driven insights and tools for institutional investors.
The 2015 total return is the most subdued return since 2008 and reflects a slowing in the land investment market after several years of very robust returns in line with other investment classes.
Caution around future market uncertainty was reflected in rural land capita
UK RURAL investment recorded a total return of 5.5 per cent in 2015, a decline from the total return of 10.4 per centin 2014, according to the IPD UK Annual Rural Property Index, sponsored by Carter Jonas, and published by MSCI Inc, an independent provider of research-driven insights and tools for institutional investors.
The 2015 total return is the most subdued return since 2008 and reflects a slowing in the land investment market after several years of very robust returns in line with other investment classes.
Caution around future market uncertainty was reflected in rural land capital growth, which reduced to 4.1 per cent in 2015 from 8.9 per cent in 2014. This marked the lowest growth since 2008 when values depreciated. The decrease in the rate of capital growth contributed the most to the decline in the total return.
However, Let Land has been the best performing asset class in the last 20 years compared to All Property, Equities, and Bonds, and continues to have excellent hedging characteristics against market downturn than more volatile assets.
Ben Ainscough, associate, in the rural division at Carter Jonas’ Northampton office said: “Rural property investment sentiment was tempered in 2015, in part due to reduced commodity prices. More recently, political discussions around Britain exiting the European Union, and the potential effect of such a move on agri-food exports have had an impact on confidence. Farmers and investors are increasingly cautious when deciding whether to increase rental holdings or invest further.
“These combined factors have contributed to the land market cooling and investors are concerned that it will be some time before there is a clear picture for the agricultural economy. But land investment continues to have the best risk reward profile.”
The restraint in capital value growth was most pronounced in South East, where growth declined to 5.8 per cent from 17.9 per cent in 2014. There was also significant moderation in capital value growth across Eastern England, East Midlands, and Yorkshire and Humberside regions. Northern England and Scotland recorded the slowest value growth at 1.1%. Rural Income return, however, held relatively steady at 1.3% compared to 1.4 per cent in 2014.
The IPD UK Annual Rural Property Index tracks the performance of 1,873 properties with a capital value of more than £3 billion. The Index is sponsored by Carter Jonas and Savills.
For a copy of the IPD UKK Annual Rural Property Index, please contact Ben Ainscough, 01604 608200 or
