Sale of 9,400ha estate a once-in-a-century opportunity
Marketing has started for the biggest land sale in England and Wales for nearly a century. The 9,435-hectare Lake Vyrnwy Estate in Powys, central Wales, is being offered whole or in four lots by its vendor, utility Severn Trent Water.
Including 2,023 hectares of commercial forestry, 12 let farms and 31 let commercial and residential properties, the estate is being offered on a 125-year lease for GBP11 million (HK$131.95 million). It also includes 4,856 hectares of farmland which the estate farms organically with conservation charity, the Royal Society for the Protection of Birds.
'This is the largest estate to come to the market for nearly 100 years in England or Wales,' said Clive Hopkins, head of farm and estate sales at agents Knight Frank. 'It will appeal to a broad spectrum of the market from private buyers and investors through to funds, pension funds and corporate investors.'
The estate surrounds 450-hectare Lake Vyrnwy, which is owned by Severn Trent Water and supplies water to Liverpool. Amenity rights to the lake can be negotiated separately. Sporting rights are leased to a hotel.
Severn Trent was selling the estate to focus on its core activities of supplying water, chief executive Tony Wray said. The company will auction up to 50 smaller properties in autumn.
The Lake Vyrnwy Estate sale is unusual because it is offered leasehold when most country estates are freehold. The vendor wants to retain freehold to protect its water rights on the estate, the catchment area for Lake Vyrnwy. A freehold purchase is possible provided a buyer pays a higher sales price and signs covenants protecting Severn Trent's water rights.
Mike Harrison, partner in charge of landed estates at accountants Saffery Champness, said the leasehold price was high.
'This is rather an expensive deal for a 125-year lease,' Harrison said. 'From an investor's point of view, in 125 years' time it is going to be worth diddly squat.'
A buyer needed to maximise income to profit, Harrison said. This could be done partly by introducing new rental agreements with the estate's tenant farmers, he said.
Alex Lawson, farms and estates director at estate agency Savills, said a leasehold purchaser would need Severn Trent's permission to make big changes on the estate, including constructing new buildings and launching wind power schemes.
'That is going to be a nightmare for someone who wants to be proactive and entrepreneurial,' he said.
Hugo Thistlethwayte, managing director of buyers' agency Prime Purchase, said buyers were increasingly willing to consider remote estates. 'Factors including the internet and the rise in helicopter travel have provided far greater flexibility for individuals, who can now work from anywhere in the world,' he said.
The Lake Vyrnwy Estate sale coincides with a revival in Britain's land market. Savills' research shows only 34,400 hectares of farmland came up for sale in Britain during the first six months of 2010, half as much as 10 years ago. However, the market has rebounded this summer.
'Until two or three months ago, there was an absolute dearth of estates on the market,' Lawson said. 'But in the past month or two, a number of estates have come on. People could see that farmland values had improved and there is a bit more confidence in the residential market, and they thought now may be the time to find a buyer.'
Severn Trent is not the only company selling land in Britain. 'There are a number talking about it, including British Coal, who have a big portfolio,' Lawson said.
Country retreat
Lake Vyrnwy Estate in Wales is being offered on a 125-year lease
The estate includes 12 farms and this many commercial and residential properties: 31
