Long-term leasing, over five years in duration, is becomingly increasingly popular, according to the Society of Chartered Surveyors Ireland (SCSI) and Teagasc's Agricultural Land Market Review and Outlook Report 2020.“While the volume of sales in 2019 was broadly similar to 2018, one trend we are seeing is an increased demand for long-term leases,” said chair of the SCSI’s rural agency group Miah McGrath.
Long-term leasing, over five years in duration, is becomingly increasingly popular, according to the Society of Chartered Surveyors Ireland (SCSI) and Teagasc's Agricultural Land Market Review and Outlook Report 2020.
“While the volume of sales in 2019 was broadly similar to 2018, one trend we are seeing is an increased demand for long-term leases,” said chair of the SCSI’s rural agency group Miah McGrath.
"Fifty-six percent of respondents nationally reported increased demand for longer leases, while 40% said the average duration of lease agreements increased. As one agent commented, leases may be lengthening because it’s a safer option than buying land, especially if its difficult to raise capital."
Munster saw the greatest increase in lease length, with 58% of those surveyed reporting increases. This compares with 32% in the rest of the country.
Conacre
The total area of land let in conacre remained static in 2019. Six percent of agents nationwide experienced an increase in the overall letting of conacre activity in 2019 compared with the previous years.
Nationally, 60% experienced no change in the volume of lettings, while 24% experienced a decline in conacre letting in 2019.
Price
Rental values were up in most categories in 2019 – by up to 14% and 12% respectively in the case of potato and cereal crop land relative to 2018, the report found.
For grazing and the main cereal crops, rents were highest in Munster, followed by Leinster, with rent prices lowest in Connaught/Ulster.
In Leinster, rent varied between €170/ac for grazing and €378/ac for potatoes. This followed a similar pattern in Munster and Connaught/Ulster, where rents were highest for potato crops and lowest for grazing.
Land market outlook
Experts warn that COVID-19 will act as a negative demand shock to the market. The short-term economic impact is likely to be quite negative, but the report says that the agri-food sector should be one of the first to see the benefits of a return to normal activity.
“Up to this, Brexit had been a major concern and our findings indicate that 74% of SCSI members believe fears over Brexit deterred buyers, while 63% believed it deterred sellers.
"Given the negative economic effect COVID-19 will have, the importance of the EU and the UK agreeing a trade deal this year is now more important than ever. Purchaser confidence is likely to remain weak until more clarity on both issues emerges,” McGrath said.
Long term prices
The report includes a long-term price series for land sales and land rental prices which has never previously been publicly available.
The data, from Smith Harrington, a firm of Chartered Surveyors and Estate Agents founded in Meath in 1870, shows that over the last 50 years the price of an acre varied from a low of €290 in 1970 to a high of over €20,000 in 2007 at the height of the Celtic Tiger, before falling to between €9,000 to €10,000 in recent years.
According to the report, average national land prices fell by 6% year on year in 2019 to an average of €8,823/ac for a property without a residence.
The survey of 163 chartered surveyors from all over the country was conducted in December and early January 2020, pre-COVID-19.
Read more
Nervous sellers hold out on land sale
Land report: Facts and figures
This is a subscriber-only article
SHARING OPTIONS: