Investment Decision Making for Land
A Rapid Evidence Assessment of Investment Decision-Making for Land
This report forms part of our research on land markets and land use change. It aims to understand whether recent land transactions are leading to (and fueled by) land use change, for example towards achieving net zero. Relatedly, it aims to explore the influence of financial support mechanisms on land values, particularly the recent interest in carbon schemes.
This report is the result of a Rapid Evidence Assessment of investment strategies in land and land values across themes of forestry, renewable power, and environmental and social governance.
The review focuses on processes of private sector investment. While public and community decision-making is relevant to land market outcomes, for tractability the review focusses on the decision-making of private sector agents such as institutional investors, energy companies and forestry companies.
What were we trying to find out?
Land values have been rising in Scotland. There is now increasing demand and competition for land emerging from private sector investors. These new motivations, investment strategies and decision-making processes need to be understood. This project seeks to explore key factors which influence people's decisions when they choose to invest in purchasing land in Scotland. Through gaining a better understanding of factors influencing demand for land, it is hoped more can be understood about rising land values.
What did we do?
We searched literature on motivations for purchasing land. Insights from the literature were used to produce a general framework of factors influencing land values and land use concentration in Scotland.
What did we learn?
We identified general decision-making factors which influence demand for land and land values across different forms of investment:
- Resource availability
- proximity to market
- fiscal incentives
- policy and regulation
- portfolio diversification
- market expectations, risk and uncertainty
- environmental impact and social acceptance
- agent level factors
From this research, we developed a new conceptual model. The new conceptual model demonstrates the factors which influence land values, including financial mechanisms such as tax breaks, subsidies, grants and private market carbon payments.
What do we recommend?
We recommend that the new conceptual model is used as a useful framework by Scottish policy-makers to understand the complex (and often interrelated) factors that influence land values.
What happens next?
In coming years, the model will be applied to better understand land use decision-making and changes in land values across a range of case study contexts.
Read the full research report and research briefing below.