Estate Benchmarking Survey

Estate Benchmarking Survey
A Positive Prospect

23 November 2015, by Ian Bailey

Rural estates continue to perform well compared with other asset classes.


The economic outlook for rural estates remains positive despite weaker agricultural prospects. We expect, in at least the short term, the income from the agricultural sector to come under pressure as low commodity prices across most sectors feed through into reduced farm profits and therefore rents.

There is also a greater risk than at the start of the year of farmland values rising more slowly than they have done in the past five years, again mainly due to lower commodity prices. This would be a fundamental change in the market and may lead to lower total returns from farmland in the short to medium term.

On the plus side the economy is continuing to improve and household spending remains robust as subdued inflation, record low interest rates and strong sterling supports consumer sentiment. This should improve the outlook for leisure enterprises on estates and the steady recovery progress of the past three years should continue.

The let residential sector on estates will benefit from increased demand from private renters and we expect continued growth in the residential rent roll. Savills research forecasts that the number of households in the private rented sector will increase by 1.2 million by 2019; this represents a 24% increase on 2014 levels.

There will always be some uncertainty, especially surrounding political issues; the EU referendum and devolution (country and regional) will be two key areas to monitor.

In August 2015, the Government published a 10-point plan for boosting productivity in rural areas, of which connectivity to the wider economy was a key theme.

High speed broadband is probably the single most significant factor to unlock further rental growth and opportunities, across the residential, commercial and leisure sectors, on rural estates where connectivity is poor.

We believe that rural estates, which have a range of property assets, are in a strong position to weather the current pressures on farm incomes whilst maximising the opportunities to generate income from non-agricultural assets and enterprises.

In addition, the increased development and house-building activity may create substantial capital performance for some.


Key Contacts

Ian Bailey

Ian Bailey

Rural Research

Margaret Street

+44 (0) 207 299 3099


Sophie Tidy

Sophie Tidy

Director MRICS, FAAV
Estate Management


+44 (0) 1865 269 162


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