Investment in a rural estate would have given one of best returns last year

A RURAL estate with manor, land and commercial interests would have outperformed antiques, wine, equities, commercial and residential property as an investment over the past year, according to a survey of eight recognised investment assets.

An estate of 3,208 acres would have taken third place in the most worthwhile investments according to the eight categories, behind gold and classic cars, says property consultancy Carter Jonas.

But agricultural land alone, without any other property or commercial diversity, outperformed all other recognised asset classes reviewed in the report, except for gold.

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“Agricultural land values in Yorkshire remain as strong as anywhere in the country and we continue to see land as an excellent investment,” said Andrew Fallows of the rural division in Yorkshire.

The consultancy came up with the concept of a ‘model estate’ to compare as an investment with other assets and found that it would have rated a return of 6.5 per cent in 2011.

The theoretical property comprises a combination of let and in-hand farms, six let houses, 14 let commercial properties, a telecoms mast, syndicate shoot and fishing rights.

“Unlike other asset classes, the ‘model estate’ is a timeless, tangible asset. Moreover, it’s productive and offers investors exposure to a number of sectors, providing opportunities to diversify their income streams in order to adapt to market conditions,” said Mr Fallows.

Gold and classic cars were the only two asset classes to supersede the performance of the model estate in 2011, but Carter Jonas points out that neither of these provide a revenue return or a significant lifestyle benefit, unlike the estate. Minimised inheritance tax liability was also given as an additional benefit. “The advantages offered by this asset class in terms of the financial stability it delivers and fiscal advantage it offers, fuel capital growth as supply remains tight across the market,” added Mr Fallows.

If the manor house were left out of the notional estate the total return rises to 8.4 per cent, and up to 12.5 per cent when excluding the commercial elements, highlighting the downward pressure on the residential property market.

The model estate is based in the rural area between the M4, M40 and M5 in the Midlands. It witnessed a £1.8m rise in capital value from its £28.2m in 2010, which compares to a total return of seven per cent in 2010.