As a tangible asset, farmland is highly appealing to investors, especially those cautious of volatile stocks, shares and bonds. Not correlated with mainstream asset classes, investment in agricultural land is based simply on supply and demand and similarly to gold, has remained one of the most robust asset classes in recent times.
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Nothing noteworthy or new about landbanking. it is a waste of productive rural land for the purpose of speculating n rezoning & windfall profits pushing farms further away from their markets & increasing the cost of fresh produce.
You are a bit slow Jess thats old news. In fact over the last 6 months world wheat stocks have risen to a record high. After many years of sustained Land price growth. I think growth will slow, and steady. Nothing can rapidly increase forever . I think yeilds will steady for a few years before increasing again. If you arent aware commodity prices have fallen.
Interesting to see this come out jess, I disagree with the other posters, I believe farmland, “not landbanking?” Will be a great investment going forward. We are in a new paradigm, that is obvious to everyone who can accept it, and the old investments are rapidly showing themselves as losers. The years of sitting on your bum and counting on little entrepreneurs to make lots of money and pay you lots of rent is fast coming to an end.
I see no reason why energy and food prices will reverse their uptrend in the decades to come. With 6 billion odd to feed, farmland that you can work or put others to work on is a good idea I believe. Much better than a powdercoating shop or a technologies shop, all of which are now contracting, with many of their landlords beginning to struggle to cover outgoings.
Scott No Mates wrote:Nothing noteworthy or new about landbanking. it is a waste of productive rural land for the purpose of speculating n rezoning & windfall profits pushing farms further away from their markets & increasing the cost of fresh produce.Where did that come from ? Scot. Who said any thing about land banking??
How would that work out of curiousity? Some colleagues of mine are farmers and after hearing the ROI, unless your a large corporation seeking a steady yet small return or an individual who has had the farmland for decades, it is too pricey to buy in and make profitable.
It's more a lifestyle choice rather than a good ROI. Would that minimal profit not limit the land value?
It does limit the land value NHG, today it does, which is a good thing IMO. If I can see a potential when it is still hazy on the horizon and when everyone else is thumbing their nose then I could see huge gains. Just look at those precious metals. Who would have thought 6 years ago that 400% gains and more were on the horizon? Some did and now their sitting on big profits.
Your points are quite true, today, but in 10 years time? In 20? Personally I am putting money into it and the land doesn’t have to be farmed today, a small average of good soil with a house on it can be had for a lot less than a suburban house and it too can be rented out to people in the local area, though for a lot less but enough to cover all expenses. The key is good soil, water and proximity to a regional centre I believe.
I guess it boils down to whether you believe that the last 50 years will be repeated or if instead our western societies morph into something different. All the signs I see, rising food and energy costs, retracting service and luxury industries, seem in my mind to point to a very different investing environment than the last 50 years I have lived through.
NHG wrote:How would that work out of curiousity? Some colleagues of mine are farmers and after hearing the ROI, unless your a large corporation seeking a steady yet small return or an individual who has had the farmland for decades, it is too pricey to buy in and make profitable.It's more a lifestyle choice rather than a good ROI. Would that minimal profit not limit the land value?
Not sure who you are refering to NHG. Ive bought a few blocks of Rura land, the prices paid when transacted are listed on the title first price recorded in 1967 is $640, in 1976 $24,000, in 1993, 90,000 , in 2009 identical land next door sold for $240,000, sold again in 2011 for $280,000, In the last few weeks identical land on the otherside sold for a reported $ 400,000. This land could be leased for $28,000 pa, the only expense would be about 3-4k in rates. To be very general I think rural land hit the top of the cycle a few weeks ago and prices will fall or be flat for a couple of years before taking off again. You need to buy reliable versatile land in tightly held areas with high demand at oportune times. Even despite the high dollars foreign buyers have recognized the opportunities, with arabs and chinese showing a lot of interest. Glencore has been buying a lot if land they didnt become one of the worlds most suceesful companies by making dud investments. While it maybe pricey, it is not to pricey too buy, while the banks may only give you an LVR of 65% I have found the vendors keen to give vendors finance as it suits them( and it may be a no interest payment in installment loan, or low interest loan). I dont know what you mean by poor ROI, on an ivestment that can be practically 100% financed. For me it has been far better than investing in RIP ponzi investing that as no underlying basis. Like any investing it depends on the market within the market, and what is driving prices. At the momment I wouldnt be looking at farm land, but perhaps grazing land perhaps with some potential to farm. Also I know of people who have formed syndicates to buy land for little capital per investor and contol $tens of millions worth of property.
I have invested in a fair bit of farm land over the years and although it has been a good investment I have done better with other investments .
Values for good dairy farms in my area have dropped a good 30percent since 2008 .
Last month I settled on another farm with a per acre price of 3600 . Three years ago this could have realistically sold at around 5500-6000 per acre ! The strong dollar is hurting agriculture a lot at the moment but of course this will not always be the case….
Yes, it is right that farmland is becoming most preferable for real estate investment as it provide better return and profit as comapred to commercial and private property.
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