Gross investment in Scottish estates reaches new record in 2021
The market for Scottish estates showed remarkable growth in 2021 with gross investment more than doubling and the average price of estates sold increasing by 87% from £4.7m to £8.8m.
Strutt & Parker’s latest annual Scottish Estate Market Review shows a record of nearly £250m was invested in the purchase of Scottish estates in 2021, up by 119% from £113m in 2020 – itself also a record – and a 333% increase over the four-year period from 2018 when £57m was invested.
Two key factors are driving this market. The first is lifestyle changes caused by Covid-19 which has resulted in a huge upswing in demand for rural living and a corresponding rise in demand for residential property in Scotland – particularly in some of its more peripheral parts. This has seen both demand and prices increase for residential estates.
The second – and more significant factor – is the climate crisis and the international commitment to attain net zero greenhouse gas emissions which has resulted in a massive increase in demand, particularly for large, mixed-use, upland estates.
Scotland’s rural land – and its uplands in particular – offer extensive potential for carbon sequestration which can be monetised through the establishment and validation of carbon credits. Landowners can then use these credits to offset the emissions of their own commercial activities or can sell them to other users seeking to do so.
The development of the carbon market has created both a new source of demand and a dramatic increase in capital value for land that has potential for carbon accreditation. As a result, the buyers of estates – and upland estates in particular – tend to be institutional funds, corporate entities and charitable bodies who are buying for natural capital and carbon investment projects.
Buyer breakdown and outlook
The analysis shows that in total 36 Scottish estates were offered for sale in 2021, which is the same number as were marketed in each of the previous three years.
Just over two thirds of the buyers (68%) were UK-based, with 32% based overseas and 54% of the buyers were private individuals or families, while 46% were entities such as funds, charities or corporate bodies.
Looking ahead, we have instructions to prepare for the sale of a number of estates, including substantial upland estates offering potential for natural capital investment, and a variety of residential and mixed-uses estates, so an increase in the supply of estates this year seems likely.
However, our view is that the strength of this market will continue as the number and variety of active investors continues to exceed the availability of estates for sale.
Natural capital investment report
It was announced in December that Strutt & Parker will be providing data and insight for a major report which has been commissioned by the Scottish Land Commission to gain a greater understanding of how increased demand for natural capital investment is driving activity in the land market.
The report aims to provide an evidence base for policy makers to address the risks and opportunities associated with growth in demand for carbon and other natural capital assets in Scotland.
To read further detail on the Scottish estates market download our full market report.
