The demand for land for dairy farmers is set to be strengthened this year, according to research by Sherry Fitzgerald.
The estate agent has determined that in 2024, in the agricultural land market, “higher milk prices” will “bolster demand from dairy farmers”.
This was detailed by the publishing of the Irish Property Capital Flows 2023 today (Wednesday, June 19), where it was revealed that last year, spend on agricultural land fell by 11% to reach €357 million.
However, the research has shown that the impact of the higher milk prices “may be offset somewhat by poorer weather conditions”.
Development land transactions also fell significantly during the year to total €392 million, representing 15% of total commercial capital flows.
Total capital flows into the commercial market includes investment in commercial property and development land, as well as other commercial property sales valued at €1 million or greater, and agricultural land sales:
In the above map, it can be seen that only ten counties recorded increases in commercial
capital flows during the year, with the remainder experiencing decreases.
However, it must be noted that commercial spend outside of the greater Dublin area (GDA) and regional centres are on a much smaller scale and therefore more volatile, particularly given that the minimum value used in the analysis for direct investment, other commercial property sales and development land transactions is €1 million.
Land prices
Agricultural land accounted for 14% of total commercial capital flows equating to €357 million, which was an 11% fall in 2023.
Sherry Fitzgerald stated this decrease reflected “poor weather conditions, reduced dairy prices, higher costs and tighter lending conditions which impacted farmers’ incomes and their ability to fund land purchases, particularly in the second half of the year.
“This is despite the new nitrate rules which led to a surge of land purchases among dairy farmers to meet requirements,” the research revealed.
The Sherry FitzGerald agricultural land barometer recorded a 10% increase in land values in 2023 compared to 11.5% the previous year.
The first half of the year saw more robust growth with land values rising by 7.2%, easing to a more moderate 2.6% in the second half.
The estate agent research has shown that “although demand for development land remains strong, particularly that with residential potential, continued delays in the planning system means that sites without permission are less attractive”.
A further challenge in the development land market is the limited supply of zoned land which may continue to impact transaction activity unless the situation is addressed.