Estate

Major report shows Scotland’s changing rural land market

A groundbreaking report reveals changes to Scotland’s rural land market and values, amid strong timber prices and rising demand in non-farming leisure estates.

The report published today by the Scottish Land Commission shows the Scottish rural land market is characterised by exceptionally high demand but continued low supply, resulting in rising values.

The Rural Land Market Insights Report established that non-farming investors are playing an increasing role throughout the land market and there is heightened demand for smaller farms as lifestyle holdings and from corporate entities and investors interested in plantable land and forestry holdings.

The report was compiled by Scotland’s Rural College (SRUC) in partnership with land agents Savills and Strutt & Parker, with support from the Royal Institution of Chartered Surveyors (RICS). It draws on published market information and interviews with sector experts, to provide a current picture of buyer and seller motivations, to better understand the land market and what is driving it.

Hamish Trench, Chief Executive of the Scottish Land Commission, said:

“This report shows what is happening in the rural land market and helps us understand why. Emerging carbon and natural capital value is an increasing influence, but other drivers, particularly high timber prices and forestry values remain significant.

“It emphasises that while the amount of land coming to the market has remained largely the same over recent years, demand from different types of buyer has increased significantly, raising prices.”

The report found the growing role of non-farming investors has resulted in land values being increasingly influenced by long-term investment potential and corporate environmental, social and governance (ESG) considerations. With farmland values rising by 31.2% in Scotland in 2021 against 6.2% across UK.

There has also been a marked shift in buyer types, with nearly half of all estates purchased in Scotland in 2021 sold to corporate bodies, investment funds or charitable trusts – motivated by the potential for carbon offsetting and developing large-scale environmental improvement.

Off-market sales make up a growing proportion of land market activity, the report finds, with up to one-third of farmland, forestry and plantable land occurring off-market, rising to almost two-thirds of estate sales.

The off-market sales trend may exclude certain buyers and constrain access to land for individuals, communities and businesses, raising questions about transparency of the land market, which the report suggests could further reinforce Scotland’s existing pattern of concentrated land ownership.