Strong demand for leased land driving prices higher

Having started working for Smith Properties in 2004 and taking over as managing director in 2013, Raymond Smith has years of experience leasing land. The auctioneer predicts a strong demand for leased land in 2023.

“Land prices have increased from around €150/€200 per acre to over €300 in recent times, there is very strong demand. Some farmers from places in west Cavan like Ballyconnell will travel as far as places like Ballyjamesduff, where land is better suited for grazing,” he revealed.

If there are good facilities on leased land it will make it much more attractive for farmers. The additional value of a slatted shed depends on its size but can be rented out for around €500 per bay.

Mr Smith also says good quality facilities will increase the value of a farm holding.

While the demand for rented land is high, Raymond says it usually peaks after the middle of March.

“After St Patrick's Day the demand for leased land usually increases. This is because the land is usually drier and in better condition, which leads to better morale among farmers. Although this year temperatures are three to four degrees higher than they were this time last year, so ground conditions are good."

Leasing is more viable to farmers than purchasing land, according to Raymond who in turn says it is in the farmer’s interest to maintain the quality of the land properly.

“Because there is a tax incentive for a five-year lease, farmers are leasing land for longer periods so they can plan around that. This means they are more likely to increase the quality of the land, because they’ll get full value for it. If they look after it, they are more likely to get their lease renewed. So they aren’t afraid to put money into it, through things like fencing, drainage, animal handling facilities, water systems and better grassland management. This is all makes the land better, safer working environments.”

Raymond also says that the price for farmers to purchase land varies hugely depending on its size quality, facilities and demand in the market.

“If a parcel of land is over 30-40 acres, it will generate more interest. If it has good accessibility to it and is accompanied by good modern farm buildings, it makes it more attractive. Obviously good quality land will be more attractive than marginal land. Price varies in range from €5,000 to €16,000 per acre with the average price paid around €9,000."

Forestry

Raymond also says forestry land is becoming a more attractive prospect for farmers.

“There is more demand for land for farmers to plant forestry, there are a lot of advantages in turning land to forestry, with both premiums and increased quality of timber harvesting."