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Strong results posted for Scotland's rural estate sector

Savills Estate Benchmarking survey shows a 33% uplift in gross income for Scottish estates, with the highest rate of growth generated by commercial rents which have increased in line with the improving economic outlook.
Expenditure by estates has also increased.  Average total expenditure across Scottish rural estates increased during 2013 by 12.3% to £96 per acre (£146 per ha), the largest increase for four years.  Repairs on both tenants’ let homes and farm buildings represented three quarters of costs, and almost 40% of gross income.  Other expenditure included projects such as renewable energy, wildlife schemes and river bank repairs.
Kenneth Munn, Savills Head of Estate Management in Scotland said:  “Our survey reinforces the benefits of having a diverse portfolio of enterprises.  This means that responsible estate owners can take advantage of niche trends to mitigate against a downturn in a specific sector.  We expect average gross incomes on rural estates to continue in a steady upward direction.  The improving outlook is allowing investment back into the fabric of the countryside and we anticipate this trend will continue.”
Average gross income increased to £123 per acre.  Farming remains the main source of income on Scottish estates, accounting for 39% of gross income at £48 per acre.
Income from residential lettings and leisure activities also increased, by 15% and 7.3% respectively.
Rural enterprises such as woodland, sporting activities and renewable energy, all combined to improve the bottom line on the average rural estate in Scotland.  70% of respondents reported that they had assessed the renewable energy potential of their estate recently, with another 12% planning to do so within a 12 month period.
Rural assets continue to outperform residential and commercial and our survey records a healthy investment performance. Farmland contributes the lion’s share of the returns, giving a total return of 14.5%.  On the other hand, the let residential sector on estates showed a similar downward trend to the mainstream market, with returns from residential lets down by 3.8% and capital growth down 6%.

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