Pomp & Circumstance

For the markets, June is always a busy month. Although none more so, it would appear, than if you're the British Monarch.

What with all the pomp of the Jubilee (and an Official Birthday), the Royal Family has certainly done its bit to lift the nation’s mood and to encourage some spend.

Only that’s not all. Last week the Crown Estate, the company that owns and manages the sovereign’s UK land and property portfolio, announced net profits of £240m and a growth in total capital value to just over £8bn.

What’s more, the marine estate division – that covers the seabed up to 12 nautical miles from the shore – delivered some of the best performance yet.

Investment in offshore wind farms (combined with a demand for dredged aggregates, used in construction) increased divisional growth by almost a quarter and generated revenue of £55.6m.

No small change in the current economic climate. And exactly the sort of performance that helped deliver an overall group gain of 11% from 2011.

Impressive stuff. However, step back from the specifics of the Crown Estate and the story becomes all the more compelling.

Throughout Western Europe, farmland and agricultural values have, over recent years, consistently outperformed almost all other areas of the property market. A peak performance that is in part supported by higher soft commodity prices, but also supported by a wider move towards wind and solar.

And that’s an important shift. Since it means that it’s not just high profile property portfolios that stand to gain.

Moreover, European landowners have started to capitalise on new ways in which they can register returns – cashing in on what was previously thought of as relatively low-grade agricultural assets.

All in all, a good deal for the a-typical asset-rich and cash-poor landowner who is invariably on the lookout for ways in which to diversify future revenue.

And what’s interesting of course is that in any smart deal, the focus is not on the incremental numbers per se, but rather, on the strength of the relationship, the length of tenure and the term.

With manufacturers and developers expressing growing unease at the UK government’s handling of the Electricity Market Reform and with prospective manufacturing hubs increasingly finding that they are bidding against each other and in the process, cannibalising rates, perhaps there’s a lesson to be learned.

Short-term gain may register some swift returns, but as the latest Crown Estate numbers show, it’s only through an ability to demonstrate genuine empathy and understanding of a market that portfolios can truly expect to gain.