Farmland will provide strong return, says Braemar

Rachael Tinniswood

Fund manager, the Braemar Group, has launched its UK Agricultural Land Cell, a Channel Islands-listed open ended investment company which gives investors access to British farmland.

The move comes just two months after the company started its first agricultural investment vehicle.

The cell will purchase tenanted British arable farmland, and is expected to provide an increasing return in the medium/long-term as the price of agricultural land in the UK continues to rise in value in order to move into line with Europe.

According to Hale-based Braemar, while the UK buy-to-let and commercial property markets are still feeling the effects of the 'credit crunch', a global cereal shortage, rising commodity prices and rising land yields, in addition to the increasing popularity of bio-fuels, has made investing in arable land an attractive proposition.

British farmland is currently significantly cheaper than that of many other EU countries, with average land prices in Denmark some 50% higher than in the UK, and 100% higher in the Republic of Ireland, while Savills' is forecasting that British farmland values will increase by 10-15% this year.

As a Guernsey-listed, open-ended investment company, the cell benefits from liquidity and a tax efficient structure, Braemar said, making it suitable for investment by offshore bonds, pensions, trusts, companies and individuals.

Marc Duschenes, chief executive of Braemar, said: "Growth in the bio-fuel industry is set to provide a much needed boost to British agriculture, and we hope that the investment the oil majors are making in this country to meet aggressive EU bio-fuel targets means that the crops will continue to be sourced locally. That can only be good news for UK farmland valuations as EU legislation is implemented."

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