Income generated from the commercial and leisure sectors on rural estates stabilised in 2011 at 20% of gross income. The majority of this income was derived from the commercial sector, which contributed £32 per acre (£79 per ha) or 16% of gross income. All leisure enterprises contributed 4% of gross income which equated to around £7.50 per acre (£18.50 per ha).

Average office rents on ’All Estates’ recovered by 5.7% in 2011 to almost £10 per sq ft - back to a similar level recorded in 2008 (see Graph 5 in the gallery). Location is the key to rental values with the highest rents achieved in the South East of England (almost £13 per sq ft).

Other rents

Other workspace (retail, industrial, storage and distribution) rents generally came under pressure in 2011 and remained similar to 2010 (see Graph 4 in the gallery), with little or falling rental growth as businesses reacted to the effect of the continuing economic climate.

The recovery in office rents suggests rural locations are preferred, in some cases, to urban environments. Improving rural broadband networks may also have a positive effect on rural rents.

In 2011, average rental income from telecom masts on ‘All Estates’ fell by -9% to £5,900 per mast continuing the decline in income following the 2009 peak of £7,300 per mast. We expect this trend to carry on as telecom operators amalgamate and site sharing continues.

Other income

Income from all other sources, which include woodland, sporting, minerals and wayleaves, amounted to £14.86 per acre (£36.72 per ha) in the 2011 survey year and represented 7.5% of gross income. Woodland remains a sector, from which it is difficult to achieve profitability through diversification.

These include renewable energy, carbon sequestration, other commercial and leisure enterprises. With rising energy costs, it is no coincidence there is increasing demand for firewood, which on some estates is proving lucrative once again.

Investment performance

Our research shows a continued improvement in the investment performance of rural estates in the year to 5th April 2011. The average total return from All Let Property across ‘All Estates’ was 9.3% (net income 1.3%, capital growth 8%). See Graph 5 in the gallery.

Capital growth of 11.7% for farmland boosted overall performance, which was up from the 9% recorded in 2010. In contrast, capital growth for residential property dipped in 2011 to 2.9% compared with 4.8% in 2010 reflecting the sluggish performance of this sector.

The performance of rural estates remains competitive against alternative investment assets when annualised over three, five and ten year periods despite the recovery of commercial property, equities and gilts during 2010.

Taken from 
Estate Benchmarking Survey 2011