SCOTLAND'S land market is showing signs of a slowdown after a substantial value increase in recent years due to demand from commercial forestry and natural capital investors, according to a new report.
The new report by researchers at Scotland’s Rural College (SRUC) has found factors driving value increases are now slowing, leading to an overall decline from the peak values seen in 2021.
The research, undertaken between 2019 and 2022, also found that the pace of land prices increasing means that it is still dominated by larger investors.
READ MORE: Glenfinnan Viaduct set for major £3.4 million repairs amid erosion concerns
Ian Merrell, research fellow at SRUC, said: “The land market in Scotland has been under-researched, despite the importance placed on land to achieve net zero targets, increased food production and diversifying landownership through the land reform agenda.
“We have found that the initial rush into Scottish land by natural capital investors and companies has started to slow down, but land is still increasing at a pace that excludes smaller players from the land market.”
Hill land suitable for tree planting reached the highest price in 2021 with £5500 per acre paid – 467% greater in real terms than in 2017. The value of Scottish estates also rose substantially, with an average sale price of £8.8 million in 2021 compared to a 10-year average of £4.7m.
Only arable land has demonstrated consistent growth, with the value of good arable land growing by 5.4% between 2006 and 2022, compared to average arable land which grew by 3.2%.
The dramatic increase in marginal land prices - land which is of little agricultural value - has been attributed to heightened demand from natural capital investors, particularly in afforestation and peatland carbon credits.
Upland estates have increasingly been marketed and sold as natural capital investment opportunities.
READ MORE: First-time Balmoral Castle tours sold out in 24 hours
In a separate report, researchers also looked at whether the means by which land values are determined have changed due to this changing landscape.
While land agents feel the general approach to valuing land for agriculture and forestry has remained consistent, the increase in demand for land for tree planting means that "plantability" has become a highly significant factor in determining land values - particularly for hill land.
Land values have also been influenced by various external market factors, including interest rates, inflation, timber prices and carbon credits, which have impacted investment demand and therefore the value of sales in the market.
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here