Agricultural land values

The Irish Property Bubble (2006) NAMAwatch (Pt. I)
1

It has been said that some development land would be valued at agricultural values.

Given no other information, I assume this means current land values, or perhaps LTEV based on the past few years…

In recent times, Irish agricultural land has had the following price drivers:

  1. Scarcity of sales
  2. Supply of buyers
  3. CAP entitlements
  4. Development potential

Yield didn’t come into it.

The property bust has killed 4. It has also killed 2, as the supply of buyers for pure agricultural land was largely made up of farmers who had sold land for development and were reinvesting the proceeds.

The EU have killed 3 by attaching entitlements to the farmer rather than the land and the government by abandoning REPS payments.

NAMA will locally kill 1 if it tries to sell the agricultural land it has taken on.

So, we must return to yield as a measure of land value.

Currently, I believe:
good pasture = 150/acre
tillage = 200/acre
are top dollar rates for much of the country.

Given a derisory 3% yield (because it is farmland and is not going anywhere!):
pasture = 5k an acre
tillage = 6.6k

Current prices are, I believe, about 10k/15k… so, like everything else, NAMA needs to take up to 60% off what it considers current agricultural prices.

Comments/arguments please!

edit: updated with lobby’s figures.

2

Just a few comments, 250/acre for tillage is a bit high, more like 180 - 200 per acre this year.

And the current per acre sale price is a bit high, a recent sale in Kildare made 9K per acre, probably a bit low. Prices are at about the 10-15K level at the moment for good land. But there is a scarcity of availability and sales.

3

Thanks lobby, by good land do you mean tillage or good pasture?

I tried looking at the cso for figures:
cso.ie/releasespublications/ … dsales.pdf
but the numbers only go to Q1 2005 :unamused:

I did find this on RTE saying the average price was 15.8k last year
rte.ie/business/2009/0305/land.html

Updated sums to reflect your input.

4

Depends on the region too. I have recently bought land for investors in Roscommon/Mayo for €2500 per acre. This is pasture ground but pretty poor.

5

Thanks. By good land I’m referring to tillage, areas I’m aware of are Carlow/Kilkenny/Kildare/Laois.

6

When you consider top grade land in France makes approx 2k acre.
Agri commodity prices are the same everywhere, rock bottom and no immediate signs of an increase.
The current agri land prices are unsustainable.
Con acre might be very hard to move next year.

7

According to a report by the IFJ agri. land values are approaching 2002 levels and are down more than 35% since 2007.
63% of farms failed to sell by auction this year which still accounts for 34% of sales.
Farms for sale have collapsed by 50% this year.
So the situation on the ground is that even though the supply of land for sale has halved the price continues to plummet.