123ArticleOnline Logo
Welcome to 123ArticleOnline.com!

ALL >> Investing---Finance >> View Article

Land Investments Relative To Traditional Investments In The Recession Era

By Author: Chris Westerman
Total Articles: 133

How have land investments fared relative to traditional asset classes in recent years?


Investors are disillusioned with the performance of market-traded securities. Raw land is an alternative, but one which has its own requirements and limitations.


In the first quarter of 2013 18 firms resigned from the London Stock Exchange, up from 15 in the same time period in 2012, 10 in 2010 and 12 in 2009. Analysts told the Financial News that these departures since the collapse of Lehman Brothers are due to regulation, austerity measures and shrinking commissions.


Volatility and disappointing performances in traditional market-traded securities has been similarly widespread since 2008. Investors instead have shifted their money to alternative real assets, which range from hedge funds to commodities (agricultural, mineral), precious metals, art and antiques, real estate and raw land.


As one finance and investment advisor, Satyajit Das, told The Independent in March 2013, “Disillusioned with financial assets, the ultra-rich are focusing on scarcity - farmland, prime real estate in world cities with desirable properties, and rarities (fine art, antiques, rare cars). Even wine has emerged as an asset class, giving a new meaning to the term ‘liquidity’”. Das further explained the trick to capturing the benefits of volatility is to take advantage of large price fluctuations, particularly investment capital that is subject to “irrational exuberance”.


In other words buy low, sell high (of course). But what investors are also gravitating toward is the ability to manage the investment, either through knowledge of the asset before purchase - the skilled art dealer/buyer, for example - or in transforming the asset to something of greater value. This latter strategy is characteristic of strategic land development, changing property from one use such as agriculture or a brownfield property into residential use, for example.


This type of land investing differs dramatically from the real estate investment trusts (REITs) available in the UK since 2007. While the REITs have disappointed investors - in fairness, the lifetime of this asset class has existed almost entirely during this recessionary era - raw land provides a niche that investors find a bit more controllable. This is due to three characteristics of successful raw land investing:

Pent-up demand - With the continued net growth of the UK population (credit immigration, a healthy birth rate and improving pensioner longevity that allows more people to stay longer in their homes), it’s a simple equation to understand that more people need more homes. But due to recessionary economics and stringent financing there are many Brits, younger people in particular, who cannot buy their own homes yet. As government programs to aid home buying and a better economy arrive, that demand will need to be satisfied.

Working with knowledgeable land specialists - There are few land barons who build their empires on good luck. Instead, investor groups generally hire specialists who understand local economies and local planning authorities, as well as the homebuilder sector that ultimately is the buyer.

Temporary illiquidity - For the investor, raw land is a difficult-to-exit investment strategy. The typical land investment at a minimum requires 18 months such that investors might instead focus on a three to five year period in which the investment builds in value in preparation for a sale.

While land investments yield varied returns, due largely to the apples-to-oranges nature of location, these three characteristics provide reason for investor confidence and the increasing popularity of the asset class.


Persons drawn to land investment should consult an independent financial advisor who can vet the offer relative to all instruments in the investor’s portfolio.

Total Views: 113Word Count: 586See All articles From Author

Investing / Finance Articles

1. These Monetary Items Are Modified For Conveying Simple
Author: Tommy Harisson

2. M&a Advisory Firms
Author: Sandeep Sharma

3. Want To Invest In The Share Market For The Long Term ? The Prior The Better!
Author: Mahendra Rajput

4. Indian Gold Trading
Author: wasim rizwan

5. You Are Affirmed Cash In A While Without Such Commitments
Author: Jim Carry

6. Why You Need To Go Over The Internet Before Applying For A Home Loan
Author: Chandani Jawar

7. You Require Cash Just By Enrolling Yourself With The Loan Specialist
Author: Alexander Zeus

8. Benefits Of Getting Instant Cash Loans In I Hour India
Author: Akanksha mishra

9. The Borrower Should Remember The Repayment Sum
Author: Martina Smith

10. Best Way To Fulfill Your Housing Needs: Home Loans
Author: Chandani Jawar

11. How Benchmarking In A Business Helps In Reducing Labour Hire Costs
Author: Dylan Munro

12. India Inc May Need To Change Rating Agencies Every 3 Years
Author: Suraj Pratap Malik

13. Bitcoin Workshop | Bitcoin Seminar | How To Buy Bitcoins
Author: AB Web Technologies

14. Online Financing - The Modern Way Of Investment
Author: wealthcarreindia

15. Selling Assets Versus Sme Loans: Which Is The Better Option?
Author: Manish Damani

Login To Account
Login Email:
Password:
Forgot Password?
New User?
Sign Up Newsletter
Email Address: