The value of agricultural land has increased by 8.7% over the first nine months of 2023, according to a new report from Sherry FitzGerald.
The Agricultural Land Market Review for the third quarter (Q3) of the year shows that price growth returned to a more normal level of 1.3%, following growth of 6.1% in Q2.
“The introduction of the nitrates rules has already caused a surge in demand for both prime and marginal grassland, underpinning both purchase and rental prices”, the report said.
Land values increased by €940/ac in the first nine months of the year, which is the strongest growth rate for this period since the land report series began in 2013.
The value of prime arable land has jumped by 9.7% compared to the same period in 2022, while prime grassland values grew by 8.5% and marginal grassland prices were up 7.1%.
Land report
The weighted average price of Irish farmland at the end of Q3 2023, excluding Dublin, was around €11,785/ac, up from €10,843 at the end of 2022.
The midlands recorded the strongest growth of 17.4%, followed by the west (+13.9%) and
border (+12.3%) regions.
This comes on the back of some high-profile sales, including the 458ac Rostalla
Farm in Kilbeggan, Co. Westmeath, which sold for €4.5 million in Q2.
The report states that the most valuable agricultural land in the country is located in the mid-east with a price of €13,416/ac.
The least expensive land is found in the west where the price of an acre is €8,200.
Grassland
Sherry FitzGerald said that the value of prime grassland increased by 8.5% in the first nine months of 2023.
This is slightly higher than the 8.1% growth seen over the same period of 2022.
The weighted average price of prime grassland is now €13,207/ac, up from €12,170/ac at the end of 2022.
Prime grassland prices jumped by 19.3% in the midlands, and by 11.6% in the west, 9.2% in the mid-east and 8.4% in the southwest.
At the end of Q3 the most valuable prime grassland in Ireland was in the mid-east region, with a price tag of €14,875/ac, while the most inexpensive was the west at €9,600/ac.
There was a 7.1% increase in the value of marginal grassland, with a weighed average price of €7,870/ac.
“Farmers are less likely to discriminate between prime and marginal grassland as they pursue higher amounts of acreage to accommodate nitrate regulations, resulting in the upsurge in demand for marginal land,” the report said.
Arable land values were up by 9.7% in the first three quarters of the year, an increase from the 8.3% growth over the same period of 2022.
The weighted average price of prime arable land is now €14,723/ac, up from €13,014/ac at the end of 2022.
The most valuable region for prime arable land is now the southwest at almost €16,000/ac, overtaking the southeast.
The most inexpensive location continues to be the West region, with the price of an acre being €10,000.
Market
The report states that land values are likely to continue to increase in the short-term, but at a slower pace than the first half of 2023.
This growth will be driven by demand from both dairy farmers and investors who want to “acquire appreciating assets as a hedge against stubborn inflation”.
Philip Guckian, associate director of Sherry FitzGerald Country Homes, Farms and Estates said that unsurprisingly, the land market has emulated the trends seen in 2022.
“Overarching demand during the spring and summer, for good quality land in particular, has been a key factor of the market’s impressive performance.
“A number of large and medium sized farms have been brought to the market in the summer and coming into the autumn months as landowners seek to capitalise on elevated values,” he said.
“Transactions have been positive at all ends of the market, aided by the developments surrounding nitrate limitations.
“This is positive news given the turbulent economic environment being faced by farmers, with significant drops being recorded in output prices,” he added.
Guckian expects the final quarter (Q4) of 2023 to be positive for the agricultural land market.