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31 MAY 2018

The Moomins, a hoover inventor and Trump International, who invests best?

Investors in rural land are better off adopting the Moomin philosophy than following in the footsteps of Trump International, according to the latest research from RICS.

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'New money in rural areas – assessing the impacts of investment in rural land assets', commissioned by the RICS Research Trust and written by a research team led by Nick Gallent from UCL, analyses new investment patterns in rural areas, drawing on case studies from across Europe.

As land continues to be an attractive asset, the research compares investment cases that include Moominworld in Finland, Dyson’s investments in UK farmland, and Trump International’s Menie Estate golf course in Scotland. It looks at the most beneficial investment patterns, not just those seeking good returns on capital, but also for local communities.

Environmental, social and governance (ESG) standards

By examining the impact of investments and associated land-use changes, the research found that more can be done by national governments and international bodies to reduce the risk of local conflict and unsustainable development resulting from the pursuit of short term gain (‘quick economic wins’) through the setting of clear environmental, social and governance (ESG) standards.

The clear messaging from the report is that governments and international bodies globally should assess rural investments utilising an environmental, social and governance (ESG) framework prior to their initiation, possibly by the development of a global framework. 

Greater consideration of such standards prior to funding and planning permission would have prevented the worst cases of local conflict and investment decline observed in the case studies. While investing in rural land has many complexities, ensuring equal weight is given to ESG and monetary considerations tends to reduce risk, increase returns, and also maximises the positive impacts of new economic activity.

Moominworld vs Trump International vs Beeswax Farming

Ten case studies from across Europe were assessed to determine the impact of different models of rural investment. Many examples of good local relationships delivering positive outcomes were found, but others were characterised by growing distrust and suspicion.

In some cases, investment activities were being imposed on communities without consideration of, or consultation on, the local impacts. The underlying values of investors, and the way in which assets are managed were shown to be a key determinant of positive outcomes. 

Among the case studies with a range of broadly positive local impacts were James Dyson’s Beeswax Farming investment, which delivered a consolidation of fragmented land holdings and a range of physical changes. 

Time was invested in building good relations with local people, winning support for numerous projects. In Finland, the Moominworld investors built similarly good relations, delivering an exemplar of low-impact, sustainable development that has also been a significant commercial success. 

The processes and practices of community engagement around Trump International’s investment in Aberdeenshire have been less successful, resulting in an investment mired in controversy and poor, sometimes combative, relationships with nearby communities. Moreover, commercial priorities have too regularly been allowed to conflict with important environmental values, resulting in a project of doubtful sustainability.