The staggering price of property in central London has been outstripped by that of farmland in the UK.
The cost of prime arable land rose by nearly 11% to £7,594 an acre last year.
With investors piling in, searching for a safe haven, growth could jump to £10,630 by 2018, according to real estate advisers Savills.
This is the first time in 16 years that rural farmland has cost more than London property. Arable outperformed prime central London property during the 1973 oil crisis, the winter of 1980 - when interest rates hit 15% - and the 1990 Gulf War.
Several factors have prompted the price rises. A focus on meeting the needs of a growing global population is also increasing the appeal of farming as a business or an investment.
Savills believes that people invest in arable land because “it’s not a piece of paper or a derivative and people have confidence in it because it won’t disappear.” It said such land is also a good hedge against inflation.
In addition, the low levels of transactions are keeping up the price per acre because owners are holding on to their land as a long-term investment.
Furthermore, landowners receive business property relief and can leave their holdings to the next generation without inheritance tax.
Foreign buyers are keen because they think that the UK has liberal land ownership laws. But overseas investment fell over the last 10 years from 9% to 2% as investors, mostly from Denmark and Ireland, found better value in their own countries.
