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Countryside property leads, say rural watchdogs Farmland property outperformed the commercial markets for the third consecutive year according to the IPD UK Rural Investment Property Index, sponsored by CLA member, Smiths Gore. The index measures the performance of farm land and rural property worth just under £2bn held by institutional and private investors. "Capital value growth was again the main driver of total return performance, delivering 8.2% return last year," comments Gerald Fitzgerald, head of property valuations and investments. "Of overarching importance to investors is the fact that farm land continues to perform well during recessions and is a useful asset to have in a portfolio. The capital drivers remain three-fold; farmers buying land when the opportunity arises, people purchasing for lifestyle and leisure reasons and investors purchasing for the fiscal benefits." CLA West Midlands chief, Caroline Bedell, added that although the recent election had the potential to rock sentiment in all markets, the threat to some of the new farm investment funds of changes to Inheritance Tax reliefs has receded with the advent of a Conservative-Liberal Democrat Government which supports farming. "We expect capital values to rise in both the rural investment and vacant possession markets. However, the reform of the Common Agricultural Policy is likely to start to affect land markets in the next 12-24 months as landowners won't sell their land in case they miss out on a windfall in the reform," she said. In 2009, rural property delivered 8.2% return compared with residential property (11%), equities (30.1%), commercial property (3.5%) and bonds (-0.3%). However, over the three, five and ten year picture, rural property consistently outperformed all asset classes. |
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