The market for Scottish estates cooled slightly in 2022, but prices remain “significantly higher” than they were two years ago, according to UK property consultant Strutt & Parker.

Strutt & Parker’s latest annual estate market review shows that the number of transactions fell by 18% in 2022, with the gross cumulative sum spent on Scottish estates ending up at £188 million, down from a record-breaking £247 million in 2021.

Head of estates and farm agency for the estate agency, Robert McCulloch, said: “The estates market in 2022 did cool somewhat, compared with 2021 where we saw rapid and extraordinary growth, with investment in estates reaching record levels.

“Yet while we have seen investment and values dip in comparison to 2021, the Scottish estates market remains incredibly strong with total investment and average sales prices still significantly higher than prior to 2020.

“The highest price achieved for an estate was in excess of £20 million and the average sale price was £8.2 million.

“This was a decrease of about 7% on the 2021 average price of £8.8 million, but still way ahead of the five-year average of £5.4 million.”

Rural land market

Strutt & Parker has said that the research comes at a time when there is “considerable public interest” in how the rural land market in Scotland may be changing, with a particular focus on the impact of increased demand from non-farming investors.

The trend of Scottish estates being discretionarily purchased by wealthy buyers not looking for a financial return switched in 2020 and 2021, the land consultancy said.

During this period, global pension funds, foundations, charities and corporate bodies started to focus on the natural capital investment opportunities presented by estates through the carbon accreditations markets for peatland and woodland.

Land prices then rose to reflect this new level of demand and the income generation potential from these emerging forms of land use.

These buying trends continued for the first eight months of 2022, when six estate sales were concluded or agreed at prices of more than £15 million.

However, Strutt & Parker said, the autumn months of 2022 saw activity slow, with estates taking longer to find buyers at sale prices below expectations or remaining available for sale.

McCulloch said the evidence of a cooling market sentiment should perhaps come as no surprise with all the relevant background factors, such as rising interest rates, inflation, the cost-of-living crisis and the war in Ukraine.

A positive outlook

Despite these negative impacts on the market, McColloch said the outlook for 2023 remains positive.

“While there were undoubtedly headwinds which produced a little more deliberation amongst purchasers last year than in 2021, and some of these continue to blow, the opportunities that Scotland’s landscape and natural resources offer purchasers of varying budgets – both at a landscape scale and at more modest levels – are likely to dictate another year of active trade in the sector,” he said.

“We already have instructions to prepare for the sale of several estates, including upland and low ground properties with a variety of land use potential, including carbon and natural capital investment, commercial forestry, agriculture, renewable energy, leisure and residential.

“Some of these will be on the open market, while others will be marketed privately, so I would urge active investors to contact us to ensure they are aware of purchasing opportunities that may be of interest.”