Knight Frank to capitalize on Brexit ag opportunities

The firm is enlarging its rural team in the UK and introducing an ag-finance service to broker deals between farmers and investors, providing expertise amid Brexit uncertainty.

Faced with huge uncertainty created by Brexit, Knight Frank expanded its rural asset management team in the South West of England, creating an agri-finance service to advise farmers how to shape their businesses.

“We are facing a very different political landscape and huge uncertainty about what the future will look like. Farmers need to know where they stand. That’s why we enlarged our South West rural team, where there is still a big appetite to have land to give farmers the advice they need,” Edward Clarkson, the new head of southwest rural property sales, said at his Exeter-based office.

“I think there are big opportunities here. There are a lot of smaller farmers in the West Country who will need to diversify, use new technology or expand as much as they can to benefit from economies of scale in the wake of Brexit when agricultural subsidies will be phased out over seven years and replaced by environment-related payments. There will be winners and losers,” he explained. “Upland farms on Dartmoor or Exmoor could benefit from the change, for example, as they will qualify nicely for the environment route,” he stressed.

Who’s investing?

Part of Knight’s expansion includes the addition of John Williams to Edward Dixon’s rural asset management team in Bristol to let out farmland on behalf of family-run businesses or corporate investors, such as the UK’s 2,800-plus pension funds, to gain rental income. Although farmland prices are estimated to have fallen by around 15 percent since the highs of 2015, they have not nose-dived, while farmland sales have declined amid uncertainty created by Brexit.

“Some foreign investors especially from Asia and the US are, nevertheless, being attracted by the weak pound, which has fallen by 30 percent,” Williams added. In the short term, the weak pound is also benefiting exporters and farmers whose subsidies are paid in euros.

There have also been a few big sales such as the Irish bought last year a big chunk of land owned by the Zurich-based pension funds, the Sutton Scotney estate. Some farmland is also being sold off for housing development, which is holding prices. Citing an example, Dixon said we have gained planning for 832 houses on 120 acres of a 1500 acres estate owned by a pension fund to be sold to developers. Other big UK landowners include the Crown Estate as well as the government-owned Forestry Commission.

Ag-finance service

Another part of the expansion includes the creation of a new ag-finance service, headed by banking expert Rachel Barnet, to advise farmers on how to develop their business or acquire new land, brokering deals between farmers and investors, Edward Dixon, from the rural asset management team in Bristol, said. “Farmers will have to become more market-focused and willing to take risk to stay in business post-Brexit. Many banks and other lenders are interested in it,” Williams  added. They might fund projects such as the installation of an ice-cream parlor, a restaurant on the farm or a robotic milking parlor, which will need a big cash injection, he explained.

Dixon believes there will be big changes in UK agriculture over the next 10 years, working towards robotics, driverless tractors and precision agriculture. “We see opportunities arising from Brexit and we want to help our clients benefit from them,” he said.

“As farming and the wider rural economy changes in anticipation of Brexit, so does Knight Frank. Knight Frank are on hand in the South West to provide expert assistance and advice with these new appointments,” Ross Murray, chairman of Rural Asset Management Committee concluded.