Rural

Continued optimism in farms and estates market.

Is farmland a good investment?

Certainly, Scotland’s farmland market appears to be buoyant, and research shows that average prime arable values rose by six per cent across Britain during the first half of 2013 to over £8,000 per acre.

Arable land continues to be in demand because of global anxiety concerning food shortages, and because it is a tangible, safe investment that is more appealing than stocks and shares for many. 

Land that can be planted for forestry is also back in vogue and has continued to reap rewards, particularly in Scotland which accounts for 75% of the UK market.  

Hill farms, at one end of the spectrum, and prime arable land at the other, are consistently in demand; and as a result values of some of the less profitable rough grazing, and pasture ground in between, are also rising as a result.

There has rarely been so little land available to buy in Scotland.  At the peak of the market in the late 1980s, the Scottish Farmer or Scotsman would have advertised over 140,000 acres of farmland for sale in Scotland in a year.  With the advent of Foot and Mouth and the CAP reform of 2001 supply  dropped  to no more than 40,000 acres, yet today’s levels are even lower.  There were barely 30,000 acres on the market throughout 2013 and that lack of supply, low interest rates, high profitability, tax advantages and perceived food shortages, are driving people towards land. 

Savills expects the best land to carry on performing, but perhaps for a gap to open up between it and secondary land which relies heavily on the subsidies that are currently under review in Europe.

A strong estate market

The total value of Scottish estates traded this year is already around £68m, considerably more than the £46m spent on purchases during the whole of 2012.  There have been varying price tags for the fourteen estates traded, with one selling for almost £20m, two between £8m and £10m, and the remainder for £6m or less.

The market for sporting estates is dominated by high net worth individuals seeking good quality sport and privacy.  Other common requirements include accessibility and the potential to generate income through sporting, holiday lets or renewable energy to help offset running costs.

We have received significant domestic and overseas interest for Cluny near Laggan (10,000 acres) and Kinpurnie Estate in Angus (5,400 acres).  Today’s buyers have often generated their wealth in London, the USA, Hong Kong and Singapore, although we have seen an increase in German interest in those Highland estates which have stalking.  All are keen to buy into the privacy and seclusion that only Scotland can offer.

Farmers are becoming increasingly entrepreneurial and we continue to assist our clients with a range of diversification activities, with an increasing number funding future expansion from renewable energy projects.

 
 

Key contacts

Jonathan Henson

Jonathan Henson

Director
Estate Management

Savills Perth

+44 (0) 1738 477 511

+44 (0) 1738 477 511

 

Charles Dudgeon FRICS

Charles Dudgeon FRICS

Director
Rural Sales

Savills Edinburgh

+44 (0) 131 247 3702

+44 (0) 131 247 3702

 

Hugo Struthers

Hugo Struthers

Director
Rural

Savills Perth

+44 (0) 01738 477 501

+44 (0) 01738 477 501

 

Nick Green

Nick Green

Director
Energy & Infrastructure

Savills Perth

+44 (0) 1738 477 518

+44 (0) 1738 477 518