Sporting Estate Assets Outperform FTSE
CKD Galbraith has analysed estate sales over a 25 year period and our research demonstrates that certain typical sporting estate assets have performed better in capital terms over the period than the FTSE index, writes Tim Kirkwood.
Our analysis compared returns on rural assets including grouse shooting, stalking, salmon fishing, sporting lodges and rural holiday property, as compared with more traditional stock market investments in the FTSE 100 between 1982 and 2006.The returns range from 300% to 1000% rises in value across a range of various sporting investments. For example salmon fishing assets, worth £1000 in 1982 are now worth an estimated £7500, an increase of 650% on its original value. Over the same period the stock market rose by 576%. For a summary of our findings click here...
Following our research we have also created an online "ready reckoner " so those with an interest in sporting Estates can get a useful "ball park" valuation of the assets.
Of course, these findings underline the point of which so many estate owners and land managers are acutely aware; that such performance depends heavily on committed management, custodianship, stewardship and investment. Capital gains, of course, need to be considered in terms of potential annual losses. Regrettably, these facts do not stop some politicians who love to have their cake and eat it. They complain on one hand that landed estates are "not working" and promote legislation to encourage their break-up, yet when it can be clearly demonstrated that estates are "working" this fact is then promoted as another reason to attack them.
CKD Galbraith's research relates to value and it is perhaps worthwhile considering what "value" really is. If something is not valued then that is a reflection that it is not wanted. Something that is not wanted is in danger of becoming neglected and something that is neglected tends to degenerate. A key driver in the economy of private rural estate ownership is protection of asset value. To protect asset value these properties need to be astutely and carefully managed and such management takes a great deal of commitment and in many cases substantial net funding from personal resources.The growth in capital value of Scottish rural sporting estates over the last 25 years therefore reflects significant investment in terms of effort and finance, borne out of the objectives of custodianship and stewardship, which in turn has protected a key asset in the Scottish economy's balance sheet. Of course, having looked back over 25 years we need to consider the future. To accept that the Scottish Parliament's Land Reform legislation in one fell swoop has slashed demand and therefore values would be foolhardy before the market has tested the new environment. Experience to date has shown that communities have indeed paid the going rate for assets they have sought to acquire. The legislation provides for those buying under statutory powers to pay compensation when there are knock-on effects.
Scotland's landowners should take pride in the fact that the assets they have so carefully nurtured over the years are in demand. The very fact that they are in demand reflects a job well done. A community wishing to acquire such assets must pay the going rate. However, those whose objective is not a long-term one of nurturing and maintaining fundamental asset values, is in our view, not the best custodian for a Scottish sporting estate. We would consider therefore that the demand and therefore prospects for the genuine article look rosy.