A collaboration between the Scottish Land Commission and Scotland’s Rural College (SRUC), the report analyses interview responses from land agents throughout the country.

The report highlights that whilst the market remains demand-driven, both supply and demand noticeably decreased through 2023 with a marked decline in overall land values particularly affecting estates and marginal hill land. The exception to this trend is prime arable land, where values have remained steady.

The land agents interviewed attribute this slowdown to multiple macro-economic factors including rising and persistently high UK interest rates alongside elevated input costs, particularly energy, and lower commodity prices, which have affected timber and agricultural produce.

Land agents also shared that some of the decline in values was due to policy uncertainty, stemming from a wide range of government ambitions and developing public policy—including the land reform agenda, a new agricultural subsidy regime, environmental targets, and natural capital market regulation—all of which were said to have played a significant role.

Alongside reported sales, the Rural Land Markets Insights reports have consistently examined off-market activity levels. In 2023, off-market sales of estates decreased compared to previous years, while off-market sales of farmland saw a slight increase, continuing the pattern observed in 2022. The latest report uncovered a new trend of semi-off-market sales, where agents privately advertise land to a select group of buyers and invite blind bids. This type of sale was particularly prevalent in sales of estates.

James MacKessack-Leitch, Policy and Practice Lead at the Scottish Land Commission, said, “Reviewing the past three years of reports, it is evident that the first report (focusing on the 2021 market) captured a period of intense competition driven by natural capital interests and commercial forestry.

“The second report highlighted a more slowly rising market, but this most recent report shows a clear decline in natural capital buyers and commercial foresters due to increasing uncertainties on the demand side.”

“What this report does is highlight how exposed Scotland’s rural land market is to fluctuations in the economy both nationally and globally as well as how responsive it can be to fiscal and public policy.

“This underlines the need for ongoing reform, including the measures proposed in the Land Reform Bill, but there is a need for more joined up policy that regulates and intervenes to shape the land market in a way that protects public interest.”

Described as “sluggish,” the market has seen increased caution among buyers who are now placing greater emphasis on due diligence as well as experiencing delays in the approvals process. Land agents reported that obtaining planting permissions for forestry and planning permissions for buildings and infrastructure is taking longer. This has led forestry buyers to prefer established woodland over bare land and has reduced interest from natural capital investors.

Simultaneously, the report notes that some companies who are looking to generate carbon credits to use against their own carbon balance sheet were increasingly looking to form partnerships with landowners rather than purchasing the land themselves.

Discussing this trend, James, said, “While we have seen a decline in demand for land from natural capital investors over the past year, we know from our wider work in this area that many investors are now looking to partner with existing landowners and communities to deliver projects.

“This shift in focus from land acquisition to local collaboration is welcome and shows how the just transition can align with similarly ambitious commitments to land reform, community empowerment and rural repopulation, as well as reduce uncertainty for investors.

“While our annual reports on the market show some significant annual variations, they also help to keep a focus on the underlying trends, including the significant extent to which public policy can influence the market.”