The best performing sectors

Agriculture and residential sectors continue to outperform other sectors.

17 September 2012, Words by Ian Bailey

 

The 2012 survey results show that average gross income on ‘All Estates’ increased 1.7% to £200 per acre (£494 per ha) across the whole estate (including woodland), a continuation of the upward trend, albeit over the past two years at a weaker rate (see Graph 1).

Agriculture and residential were the best performing sectors in 2012 with increases in total income of 6.9% and 5.5% respectively. In contrast, uncertain macroeconomic conditions impacted on the commercial and leisure sectors where total incomes fell by -7.1% and -9.3% respectively.

Efficient cost management resulted in average total expenditure in 2012 falling by -1.2% to £80 per acre (£198 per ha) resulting in a 4% increase in average net incomes (before depreciation, finance, drawings and tax) to £114 per acre (£282 per ha).

Although the average indicators in pounds per acre are important benchmarks, it is also useful to understand the relative contributions estate resources make to gross incomes.

Graph 3 illustrates that the income, as a proportion of gross income, generated by each sector has changed over time. The key points across the average of ‘All Estates’ are:

Agriculture now represents 35% of gross income compared with almost 50% in 2000. However, in recent years its contribution has bounced back slightly from the 32% recorded in 2006 and 2007 as commodity prices have improved and the recession has put pressure on the commercial sector.

Residential income now represents 40% of gross income. However, the contribution residential assets have made over the years since 2000 (37%) has been relatively static compared with other sectors.

Recessionary pressure has reduced the contribution of the commercial sector to 13% in 2012 from 16% in 2010. The 2012 contribution is at the level recorded in 2005 and 2006 – mid way along its significant growth from just 8% in 2000.

In 2012, the leisure sector on ‘All Estates’ contributed 4% of gross income. Although the proportions are smaller, leisure income shows a similar trend to commercial; contributing 2% of gross income in 2000 rising to 5% in 2006, remaining at this level until 2010 before slipping slightly current levels. Other

Location is a key factor contributing to the opportunities presented to individual estates (see Graph 4). It is important to focus on the resources which offer the best potential for future income streams within an estate’s locality.

Agriculture is the fundamental income stream in the eastern regions of England whereas non-agricultural assets squeeze the agricultural contribution to less than a quarter of gross income across the southern regions.

The average estate in the South East of England derives 47% of its income from residential property and a further 20% from commercial assets. Income from leisure related activities, is unsurprisingly strongest in the South West of England where it contributes 7% of gross income.

Graph 5 illustrates the proportion of income by estate size where, as would be expected, increasing size tends to dilute the contribution of non-agricultural assets.


 
 

Key Contacts

Ian Bailey

Ian Bailey

Director
Rural Research

Savills Margaret Street

+44 (0) 207 299 3099

 

Julie Baxter

Julie Baxter

Data Administrator
Rural Research

Savills Margaret Street

+44 (0) 1483 203492

 

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