A positive year across the rural sector

Strong results have been posted in 2013 for Scottish estates, with an improving outlook extending across all estate assets.

23 January 2014, Words by Kenneth Munn

 

Savills Estate Benchmarking survey demonstrates that Scottish estates have posted strong results in 2013. The glimmers of light being seen within the wider economy have had a positive impact on the rural sector. Indeed, there was a 33% uplift in gross income, with the improving outlook extending across all estate assets.

This has been achieved against a challenging backdrop of uncertainty brought about by the forthcoming Land Reform and Agricultural Holdings Acts review and the impending Independence Referendum in September 2014.

The results demonstrate how rural communities are benefitting from increased returns, as estates continue to reinvest higher proportions of their improving incomes into local economies in various ways. Estates continue to provide high quality affordable housing stock in the shape of pensioners accommodation, tied properties and family homes at below open market rents.

In addition, landowners have been able to increase their expenditure on improving the quality of their let agricultural and residential buildings for the benefit of tenants. Finally the sums spent on community and environmental projects have risen. From river bank repairs, improved public access, wildlife management and biodiversity schemes and renewable projects, the Scottish estates sector has proved more than ever this year that they have a key role to play in the responsible stewardship of the Scottish countryside.

Our estate benchmarking survey results reinforce the benefits of maintaining an involvement in different assets and enterprises in order to secure a stable income stream, while realising capital growth.

The results demonstrate that despite the significant growth in returns from traditional agricultural and residential sectors, alternative uses are playing a greater part in the economics of estate businesses. Increased diversification will inevitably assist estates overcome volatility peaks, such as those suffered in years of exceptional weather and poor harvests.

In addition, estates will continue to develop renewable energy projects harnessing natural resources and contributing to meet European and worldwide carbon emission targets.

Estates continue to invest large sums to improve let agricultural and residential properties. There are challenges ahead with potential changes to legislation which may increase bureaucracy and the ability to deliver quick solutions. Additional challenges include forthcoming changes to Energy Performance Certificates which may require significant capital improvements to let residential portfolios.

Landowners continue to demonstrate their willingness to plough back profits into their local areas. This, combined with the increasing optimism in the economy, should bode well for Scottish estates. However, there is real concern over land reform and the independence referendum which could constrain landowner’s ability to continue to invest such large sums. Proactive management to mitigate against the potential risks will be imperative.

 
 

Key Contacts

Ian Bailey

Ian Bailey

Director
Rural Research

Savills Margaret Street

+44 (0) 207 299 3099

 

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