Research article

Driving resilience into estate income

Estates are improving growth through greater diversification of assets, adding commercial, leisure and renewable energy enterprises to the traditional mix

As we have already noted, agriculture and residential lettings remain the bedrock of rural estates, delivering, on average, 80% of the gross income.

When it comes to alternative income streams and diversification, commercial, leisure and renewable energy enterprises make a significant contribution (see below). However, income from commercial and leisure is more closely correlated to the general economy than the agricultural economy. Different skills and mindsets are required to make a success of these enterprises.

Figure 8

FIGURE 8Commercial and leisure Income is closely correlated to the general economy

Figure 9

FIGURE 9Renewable energy Revenue (in £/acre) represents almost 2% of gross income and is increasing in a similar pattern to the growth of commercial and leisure in the 2000s

Source: Savills Research | Note *Where estates are actively generating renewable energy, this increases to £10.88 per acre (2017)

Alternative income streams

There has been a trend for farms and estates to focus on the development of income from other assets alongside, and complementing their core business including woodland and minerals. This is being driven by economic pressure, markets and the need to spread risk, especially with the uncertainties surrounding the outcomes of Brexit. With question marks over both the future of farm support and world-trade arrangements, income streams other than the traditional agricultural ones will be vitally important.

Our Estate Benchmarking Survey shows that, on average over the past five years, trading enterprises (including in-hand farms) contributed just 8% of gross income on all estates across England. This is in stark contrast to the situation in Scotland, where trading income represented 18% of gross income over the same period. This suggests that political interference in land ownership has made landowners north of the border more reluctant to let their holdings.

Our research shows that almost one-third of farms and estates have holiday accommodation (including caravans, camping and glamping). A similar proportion open their house or garden, a quarter host weddings and receptions, and more than 10% operate a farm shop (see below). Other popular choices include cafes and restaurants, filming and photography, and corporate events.

The majority (70%) currently have trading incomes below £100,000 and, of these, 16% are at the start-up stage, 17% have been trading for less than three years, while the remaining two-thirds are mature businesses.

Our survey shows that some of these enterprises have grown significantly; 20% had incomes between £100,000 and £500,000 and the remaining 10% were turning over more than £1 million per year.

Figure 10

FIGURE 10Camping to cafes Diversified enterprises on farms and estates by popularity

Source: Savills Research


Glossary and footnotes

This publication

This benchmarking survey was published in November 2017. The data used in the charts and tables is the latest available at the time of going to press. Sources are included for all the charts and tables. We have used a standard set of notes and abbreviations throughout this publication.

Review

We regularly review our survey data, which means the data published each year may not exactly match that published in the previous year’s survey. There is a separate survey for Scottish estates.

Estate structure

The average estate structure for those estates participating in the survey is:

■ 4,400 acres

■ 55 residential properties with an average density of 15 houses per 1,000 acres

■ 12,700 sq ft of commercial workspace with an average density of 2,700 sq ft per 1,000 acres

Estates range in size from less than 1,000 acres to more than 20,000 acres.

Estate ownership

Institutionally owned estates represent around 20% of the estates in the survey with the remainder in private ownership. The owner is resident on three-quarters of the privately owned estates.

Ownership objectives

Long-term retention of the core estate is the key objective for the owners of these rural estates, followed closely by income generation, and then by return on capital and environmental stewardship.

Abbreviations

AHA – Agricultural Holdings Act

AST – Assured Shorthold Tenancies

FBT – Farm Business Tenancy.

Other articles within this publication

3 other article(s) in this publication

Key contacts

Simon Smith

Simon Smith

Senior Director
Research & Consultancy

Savills Two Exchange Square

+852 2842 4573

 

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