— Knight Frank, 03 January 2023
Farmland values cruised to new highs in 2022 and even managed to outpace double-digit inflation, according to the Knight Frank Farmland Index, which tracks the performance of bare agricultural land.
Following a 3% increase during the final quarter of the year, the average price of farmland rose by 13% in 2022. This 12-month hike outperformed all the other asset classes that our index benchmarks agricultural land against, such as gold, equities and residential property.
This strong growth was driven by a continued lack of supply and strong demand from a wide range of buyers. Farmland currently straddles a number of the key geo-political issues that defined 2022, in particular food security and climate change. Environmentally focussed buyers are becoming ever more active in the market, whether from an altruistic or investment perspective.
Natural capital and nature-based solutions are the buzzwords of the moment and farmland is often the key ingredient, be it for tree planting, the generation of carbon credits or boosting biodiversity through regenerative agriculture or rewilding.
That said, I believe the farmland market has enough momentum to remain firm throughout 2023.