Scottish farmland market outlook is ‘more positive’ in current year

Last year saw a slight increase in arable land values in Scotland, a result of the turbulent market conditions that prevailed. Strutt & Parker’s annual report on the Scottish farmland market revealed that the prices being paid for land continued to fluctuate significantly. In 2024, the overall trend in land values was on the rise, with the average value of arable land on the east coast climbing to £10,500 per acre, up from £10,000 in 2023. Conversely, the values for upland land suitable for tree planting saw a decrease, fetching £3,000-£3,500 per acre compared to £3,500-£4,000 per acre in the previous year.

The analysis indicated that a total of 33,000 acres were publicly marketed in 2024, surpassing the previous year’s numbers and exceeding the five-year average. Notably, it was only the third time in the past two decades that over 100 farms were put on the market. The volume of land being marketed in Scotland has been subject to considerable variation in recent years, ranging from a low of 15,400 acres in 2020 to a high of 41,000 acres in 2022.

Douglas Orr, a farm agent for Strutt & Parker in Scotland, commented on the year’s market activity, attributing the relatively slow pace to a combination of factors such as weather conditions, changes in agricultural policy, political events like the general election, and modifications to inheritance tax announced in the Budget. Orr noted that amidst these uncertainties, demand for land felt somewhat unpredictable, with some properties selling swiftly while others lingered on the market without clear reasons.

While demand remained robust, especially from farmers looking to expand their acreage, there was a shift in buyer behavior. Orr reported that more than three quarters of farms marketed in the first half of 2024 either had offers pending or concluded sales. However, the process of finalizing sales was taking longer, and fewer interested parties were making offers. Farmers remained the primary purchasers of farmland, motivated by a desire to increase their land holdings.

Orr also highlighted that there was a decline in demand for land for environmental, social, and governance projects from what it was in 2022 and 2023, though investors were showing renewed interest. Notably, investors were gradually reentering the market to acquire land for afforestation and carbon sequestration, which bodes well for the upland market that experienced a dip in recent years. Looking ahead to 2025, Orr expressed optimism, stating that values were expected to remain stable. The improved start to the year indicated that despite challenges faced by the rural sector, individuals felt more confident in making informed decisions.