Research from Knight Frank global property consultancy indicates that the value of English farmland increased by 16% last year (from £4129/acre to £4796/acre). The research from the companies farmland index shows that the decline in sterling meant that prices actually fell for many overseas buyers when converting from their local currency.
For example, as the graph below shows, anybody backed by US dollars and buying land at the beginning of 2009 would be paying almost 15% less than they would have done at the start of 2008, taking into account exchange rates. Danish and Irish farmers, the most significant source of overseas buyers in recent years, also benefitted as the euro and Danish kroner strengthened against the pound.
Anybody from Denmark or the Eurozone considering buying land here could lose more of the currency exchange benefits if they delay their purchase too long. Recent economic indicators suggest the EU’s economy could shrink by as much as 2.5% this year with the pound predicted to strengthen further against the euro, according to currency experts.
“Investors in UK assets should consider fixing their exchange rate”, says Tom Arnold, Sales Director at UK-based broker Currency Index. “Rates can be fixed around their current levels, for up to 2 years ahead. Investors can take advantage of the weak Pound now, even if they don’t need to make a payment for some time.”
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