The real estate market might be in the doldrums, but agricultural land is holding its own.
Eversheds may have decided to close its Norwich office and be mooting secretarial job cuts down in Cambridge (TheLawyer.com, 4 September 2008 and 25 May 2009), but the firms that are returning to their East Anglian roots are still reporting growth.
At a time when Eversheds is reporting a 27 per cent fall in average profit per equity partner (TheLawyer.com, 27 May) and UK residential and commercial property prices have dropped significantly, East Anglia’s prominence as the hub of the UK’s arable sector has cushioned property teams in
“Eversheds is a law unto itself – I don’t think it represents a regional trend,” says a regional property partner at a national firm. “Our real estate turnover is up and a lot of it’s based in East Anglia. We haven’t seen the recession crucify anyone.”
Catherine Scott, a partner at Howes Percival’s six-lawyer Norwich estates team, echoes the positive sentiment. “Deal volume has increased substantially,” she says. “It’s been very busy. It did quieten down at the end of last year but not for long, and a few weeks ago it really picked up.”
Amanda Tagg, an associate in the 20-lawyer agriculture and estates team at the Cambridge office of Mills & Reeve, adds: “This area is all about arable – there’s less livestock [than in South West England and Wales]. Sugar beet, for example, is concentrated here. Agricultural farmland has held its value much better than other property. There’s increasing interest in global food security. We’re hearing of a shortage of supply and land prices are bearing up
The price of agricultural land has fallen over the past nine months but there has still been marginal growth compared with last year, according to estate agents Knight Frank. In a report released in April it found that average farmland prices stood at £4,673 per acre for the first quarter of 2009. This is 1 per cent higher than for Q1 2008 and 35 per cent higher than rates for Q1 2007. When compared with farmhouses, whose prices fell by around 20 per cent between 2008 and 2009, the less robust rates of growth in recent months seem quite healthy.
Scott says the majority of the work her team is handling involves “neighbours spending a lot on adjacent farmland”.
“There’s a lot of cash available. It’s really quite surprising – everything on the market seems to have quite a lot of interest. It’s really buoyant,” she adds.
Mills & Reeve has recently picked up new clients investing in the area, including a pension fund and some landed estates, as well as “offshore investors”. But the interest does not stop with those looking to grow crops on the land.
“People buy estates so they can enjoy shooting and sporting rights,” explains Tagg. “There’s potential for residential development and wind farms. There’s also a definite trend in biofuels, but it hasn’t tended to be as much as in other countries.”
However, just as elsewhere in the UK, East Anglia’s lawyers are unable to sit on their laurels and the pressure is on to generate results as quickly as possible.
“It’s more important now than ever to take a commercial approach to these transactions,” warns Tagg. “There’s a certain nervousness in the market. When a deal’s struck everyone wants to get it through quickly, otherwise price chips [can lead to the deal failing]. We need to have a lot of resources to throw at these transactions.”
It is also requiring an increase in specialisation, according to Scott. “There’s a non-stop stream of tax changes,” she says. “Over the years it has become a lot more complex – it’s difficult to dabble in.”
As for the agricultural team that was formerly at Eversheds in Norwich, most of them have moved over to Birketts. The firm now has 13 fee-earners in estates across Ipswich and Norwich, and is seeking to grow Cambridge. But it appears that agricultural lawyers, like land, are in extremely short supply.
“We’re trying hard to recruit in Cambridge,” says a Birketts spokeswoman. “But there’s a shortage of agricultural lawyers in the market. They’re not something that every firm has – they’re a commodity and we have to look after them. We hope we’ll be able to grow that practice to the same numbers as there are in Norwich and Ipswich.”
Sugar beet and potatoes may not be the type of meal that Eversheds’ City management think they should be feeding on, but it is more than sufficient sustenance for many smaller East Anglian firms.