Brexit and Covid-19 are proving no barrier to people wanting to purchase rural property in Scotland.
In the face of Brexit negotiations and the global pandemic, 2020 was an extraordinary year for the Scottish estate market: it has entered a new era, where newly perceived attributes are enhancing its appeal and subsequent value.
Analysis of Savills sales data demonstrates a 98% increase in buyers registering with the agency to purchase rural property in Scotland last year (from January 1 to December 31 2020).
Lockdown continues to amplify this trend, despite the fact that international buyers continue to be severely restricted from viewing Scottish property due to travel restrictions. As a result around 70% of Savills Scottish estate buyers last year were based in the UK albeit that the interest generated in those estates on the market was global.
Funds of almost £5 billion are currently chasing Scottish rural property, according to Savills data, compared with just over £4 billion at this point last year (up 20% on 2019). The Scottish estate market is rarefied, with only 23 rural estates (defined as a land holding which includes a mixture of asset or enterprise type eg residential, farming or forestry) changed hands last year. Around half of these were sold privately, without ever coming to the open market. While this in line with the long term average, the total value of Scottish estates sold last year increased by 43% to £100 million, in part as a result of stronger demand.
The beauty of Scottish estates continues to attract residential and amenity buyers, and this was particularly apparent last year, with more buyers being drawn to the great outdoors during the pandemic.
However Evelyn Channing, Savills Head of rural agency in Scotland says a new surge in interest in Scotland’s larger estates can be explained by two key purchasing drivers: natural capital and forestry.
She explained: ‘We continue to receive our fair share of calls from buyers across the world, looking to hole up in Scotland in splendid isolation. But becoming more prevalent are new entrants wishing to buy land not for its amenity or sporting potential, but for its green credentials. The ESG agenda (environmental, social and corporate governance) is bringing buyers forward of all shapes and sizes, from small Scottish businesses to large charities and investment companies.’
In particular, the continued focus on the climate crisis and the drive for net zero is fuelling a seemingly insatiable demand for land suitable for planting trees. This is resulting in forestry investors offering up to three times more for land than the traditional agricultural buyer.
Evelyn continued: ‘The forestry and planting land market is absolutely booming. My colleague Jamie Adamson and his specialist team are talking to several new funds in the market which, over the last 12 to 24 months, have been competing aggressively alongside larger, more established investors from all over Europe and beyond.’
Other buyers are looking to offset carbon emissions produced elsewhere, by purchasing natural capital.
According to Savills, their focus has largely been on planting land and established forests but also encompasses peat bogs which cover a large part of Scotland and until now regarded as having minimal value.
Evelyn said: ‘Scotland is one of the few remaining places in the world where green resources can be acquired on a meaningful scale. There is a lot of focus on addressing the climate crisis both at an individual level and from a national response.
‘This will only grow over the next decade. Scottish estates have an expanding role to play and we anticipate significant diverse interest in the estates that we will be bringing forward to the market over the next 24 months.
‘This was demonstrated last week by an extremely competitive closing date for an estate which we had been marketing quietly, exceeding not only our clients’ expectations but our own. There is a distinct imbalance between supply and demand, and as a result those that are electing to offer their estates for sale are benefitting significantly from the current market conditions.’