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Rural sector remains resilient

NEW FIGURES released by Savills have showed the Scottish rural estate sector has remained resilient in the face of economic uncertainty and rising costs.

Kenneth Munn
Kenneth Munn

The results form part of the estate agents Estate Benchmarking Survey, which was launched in Edinburgh last week.

The figures showed the average gross income on Scottish rural estates is up 5.2% on the previous year. Income from residential property has overtaken agriculture as the main income source on estates.

Farming contributed 38% of income in 2012, a reduction from the 46% it contributed in 2009. Residential property income represented 40% of gross income in 2012, which amounted to £36 per lowland acre (£89 per ha), compared with 36% in 2009.

Following a boom in those taking up diversification projects, the figures showed these leisure and commercial sectors were hit hardest by the fall in disposable incomes. However, income gained from woodland enterprises increased, reflecting landowners undertaking harvesting of commercial plantations taking advantage of relatively high timber prices.

The figures also favoured landowners, showing they were continuing to reinvest significant sums into rural residential and agricultural property, providing affordable accommodation in fragile rural communities where there is little or no provision by local authorities.

Expenditure on the average Scottish estate increased by 3.2% in 2012, to £58 per acre, with repairs to tenants' housing accounting for the largest proportion of expenditure.

Over 40% of the average estate's housing stock is provided as affordable housing for local communities, let farms and rural key workers.

Kenneth Munn of Savills said: "As mortgages remain scarce and expensive, rural landlords are fulfilling a growing role in providing affordable housing in the countryside. The increase in repairs and capital expenditure suggests that these properties are being upgraded and maintained on behalf of tenants to ensure good quality accommodation is available in these communities.

"We anticipate that estate owners will continue to demonstrate their social responsibility, by investing large sums into let residential and agricultural portfolios, supporting stable communities through the provision of jobs, good working environments and affordable homes."

Despite the poor results in commercial enterprises, Mr Munn believes diversification may still be viable for some. He added: "Diversification may still offer opportunities in some locations, but any move down this route will need careful planning and market research to help ensure success. Woodlands might be a prime target in this regard.

"Although the next few years are unlikely to be without challenges, and there may be some serious economic blows especially in Europe, we believe flexible and proactive management strategies will ensure success."

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