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Scottish estate buyers want to plant trees as well as stalk deer
[LONDON] Flicking through the sales brochure for a 15,000 acre (6,070 hectare) estate near Loch Monar, all the hallmarks of a traditional Scottish Highland manor are on display: red deer stalking, trout fishing and even ptarmigan shooting. All for £2 million (S$3.4 million).
What's more surprising is the emphasis on the vast "natural capital" at the Pait and West Monar Estate in Glen Strathfarrar and potential for "carbon sequestration".
As climate change morphs into a mainstream political issue worldwide, wealthy individuals and companies are looking at the heather-covered glens through a different lens nowadays. Rather than as an expensive escape, there's the prospect of gaining some green credentials — and cash — by balancing their carbon portfolios and raking in some generous subsidies for promoting renewable energy and sustainable farming.
Last year was a bumper period for sales of Scottish estates, with 21 sold for a collective £86 million, topping the five-year average of £73 million. Fewer are changing hands this year in what could be a reflection of Britain's tumultuous politics as the country grapples with leaving the European Union. But it's more down to a lack of supply than interest, says Tom Stewart-Moore, head of real estate agency Knight Frank's Scottish Farms Agency.
There's a new breed of buyer who's not interested in "shooting deer or catching fish", he said, but rather "global warming and sustainability". Foreign buyers account for just under a third of transactions, and the pound was down as much as 6 per cent against the dollar this year.
Traditionally, these estates were the playgrounds of the landed gentry, with some properties staying in the same family for more than four centuries. There, they would spend the summers grouse-shooting amid the rugged backdrop of the Highlands.
Then there's the super-rich. The ruler of Dubai, Mohammed bin Rashid al-Maktoum, owns an estate while Danish billionaire Anders Povlsen's purchase of more than 200,000 acres of Scottish land has made him the UK's largest private land owner.
Yet in recent months, a more diverse range of suitors has been making inquiries about estates for sale, said Evelyn Channing, director of Scottish rural sales at Savills, another realtor. They range from shipping companies nervous about their environmental impact to socially responsible wealth funds, she said, declining to name any due to potential client confidentiality.
"While you might not get a proper return, a financial return isn't the be-all and end-all anymore," said Ms Channing. "We are seeing a lot of new buyers in the market — a new style of buyer who are focused on the natural resources element and looking to potentially offset pollution elsewhere."
Taking barren moors and turning them into carbon-capturing forests offers more immediate financial incentives, too.
Last year saw the third-highest percentage rise in UK timber prices recorded in the last 35 years. Meanwhile, the Scottish government already offers a grant programme that covers up to 90 per cent of the market-rate costs of establishing a new woodland. "You can be planting for almost nothing if you're lucky," said Ms Channing.
The Scottish government says forestry is the mainstay of the country's rural income. Indeed, the pro-independence administration in Edinburgh has been a keen sponsor of green projects especially in renewable energy, which it sees as a key contributor to the economy.
Forestry supports 25,000 jobs and Scotland accounts for 84 per cent of all new woodland in the UK, according to Fergus Ewing, Scotland's minister for the rural economy.
"Ensuring continuity of supply for this vital sector is one of the driving factors that underpin our forestry grants scheme," he said. "But more importantly, woodland creation is recognised as being the primary tool we have at our disposal to tackle the climate emergency."
Existing estates are also diversifying. Key to this is the hefty maintenance costs — most notably the wage bill — that traditional sporting sources of revenue fail to cover. Financially savvy estates are finding new income through things like renewable energy production, said Stewart-Moore at Knight Frank. In short, you don't "often hear about a profitable pheasant shoot", he said.
One such example is the Ardtornish Estate on Scotland's west coast. It's been owned and operated by the Raven family for almost a century. Managing director Hugh Raven said about £15 million was invested in hydroelectric power "entirely on borrowed money," but the estate is already seeing the returns.
Ardtornish's website advertises its green credentials — acres of woodlands, low-carbon power and turning rain water into electricity — along with fishing, farming, weddings and short breaks and self-catering accommodation.
"We needed to try to find long-term sources of revenue because landed businesses are pretty marginal and quite expensive to operate," he said Income generated from hyrdoelectric power is "twice as big as all our other sources of income put together", he said, though he also pays more in tax to the Scottish government.
Each dam gets a feed-in tariff, a government-funded guaranteed payment per unit of energy generated, in addition to income accrued from selling to the general market. The UK government closed the programme to new applicants earlier this year, though subsidies could be replaced after Brexit by cash from selling carbon credits.
Key is the involvement of local people in projects, said Hamish Trench, chief executive of the Scottish Land Commission. Land ownership is a sensitive issue in Scotland going back to the revolt against the feudal system.
Danish investor Mr Povlsen's ambitious "rewilding" proposals, which would potentially see the re-introduction of wolves to Scotland, has met opposition from locals. Campaign groups fear it's just romanticising the Highlands rather than serving any practical purpose.
"Private investment is hugely welcome in land use," said Mr Trench. "But that can be done in a way that helps deliver benefits and control for local communities as well."