Our research shows the recession has hit the commercial and leisure sectors with both, on the average estate, contributing less to gross income in 2011. Rural offices have been resistant to the economic downturn, with rents increasing by 5.9% on the previous year to £6.25 per sq ft.
This reflects the benefits of providing cheaper out-of-town office space, where there is still a good latent demand. Let commercial workspace is relatively sparse on Scottish estates compared with England. While the survey records an average of around 12,000 sq ft of workspace on Scottish estates, almost 90% of this is low cost, industrial type space with average rents of around £1 per sq ft.
Telecoms mast rents fell by 2.1% in the 2011 survey to an average of £7,308 per mast. This figure reflects total income per mast (base rent and site sharing payaways).
While landlords continue to take a robust stance against telecom tenants lobbying for base rent decreases, they have no control over tenants agreeing cartel style agreements with other operators, resulting in significantly reduced site share payaways.
Leisure
Many of the leisure activities on estates would be considered luxury items and have struggled as disposable incomes have dropped. However, in 2011 this sector still contributed over 5% of gross income of the average estate income. We would expect leisure income to track fluctuations in disposable income. This trend was similar in England with downward pressure on leisure income.
Sporting
Bearing in mind that the majority of participating estates are mixed or low-ground estates, sporting income is unlikely to make up a significant proportion of the total gross income. In 2011 the income derived from all sporting activity was just over £2 per lowland acre (£5.50 per ha), up 20% on 2010.
Other income sources
Other sources, including woodland and minerals, contributed the remaining 2% of gross income and amounted to £2 per acre (£5 per ha) in 2010. Woodland would appear to be an underutilised asset, especially considering the current interest in biomass and using woodland to offset carbon emissions.
Estates will continue to regularly review all their resources, including property, employees and capital, to identify opportunities to deliver more income. This should be undertaken with appropriate advice. Targeted investment, especially on repairs and improvements to residential property, is fundamental to maximising the future income potential of an estate’s property portfolio. The results of our survey illustrate this.
Country analysis
The results of our English survey show a similar pattern of gross income growth, although growth was more constrained at 4% to £197 per acre (£486per ha) (see Graph 4).
Net income
Our 2011 survey results show that the average net income (before depreciation, finance, drawings and tax) increased by 4% to £41 per acre (£99 per ha) while costs, mainly from property repairs, increased, which dampened the increase in gross income (see
Graph 5).
In England the average net income (before depreciation, finance, drawings and tax) fell by 0.3% to £108 per acre (£267 per ha), mainly from property repairs, increased, wiping out the increase in gross income Net income was derived from an average gross income of £90 per acre (£222 per ha) and an average expenditure of £49 per acre (£121 per ha). Net income represented 46% of gross income.
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