Despite a turbulent few years, the rural sector remains attractive for many investors. Land has always fared well in difficult economic circumstances and there are some clear trends and challenges we expect to see in the coming year.
Renewable energy projects
Amongst talk of a recession and the ongoing cost of living crisis – particularly the rising cost of energy – the demand for renewable energy sources has never been higher. The deployment costs for renewable energy have reduced in price by 82% between 2010 and 2019. While there are questions over renewable energy policy – and the use of land for energy production in light of food security – demand for land remains very strong from buyers looking to purchase and utilise properties for energy production.
The scale of implementing renewable energy sources is vast, with large projects often met with resistance due to community concerns. However, smaller renewable energy developments have been welcomed for the most part, with local communities recognising their value and benefits.
Any investors wanting to be one step ahead of the planning system should look to re-scale their renewable energy projects, focussing on the fundamental benefits of self-sufficiency, particularly in local communities.
Farmland is in demand
There are new projections that the price of farmland is set to climb again in 2023 with predictions that land for woodland, renewable energy and farming will be the most in-demand picks for buyers this year. Luckily for the sector, farmland has been found to respond positively to inflation; looking back to 2007-2009, land value rose by 29%, despite there being a global financial crisis.
The demand for poorer quality grazing land is looking to be a big focus for this year. The last five years have seen an increase in demand of 22% and this year is likely to follow that trend, especially with the rising pressure to re-carbon and re-nature in our current market. Poorer quality grazing land offers simpler maintenance and ease of management. Therefore, the focus isn't on the aesthetics or placements, but more so on what it can deliver in terms of environmental and societal benefits.
Bright lights, big city
Since the COVID-19 pandemic, there have been many 'race for space' stories – people trading city life for the countryside and other rural areas. However, the last year has seen a complete about turn, with bright city lights once again calling to those living in the countryside. It's widely reported in the news that there is currently a huge demand for London properties, resulting in dramatically increased mortgage and rental prices, whilst the countryside is mellowing, with more properties being sold at reasonable prices.
While we expect real estate and farming to navigate a number of existing challenges this year, ultimately there are some promising projections and trends to look out for.