The latest bulletin from Savills covering international farmland markets has suggested that agricultural land is an attractive investment. The property consultant expects the positive trends that have been witnessed worldwide for the sector to continue into this year.
Indeed, the firm explains that the macro factor of commodity supply and demand fundamentals will help to drive farmland prices up on a global scale.
However, the report did note that the majority of mainstream organisations are not looking towards agriculture for returns, although Savills do expect this to change over the next few years.
Returns are also expected to be varied, with the decision to either participate in the business of farming - with its higher returns/risk profile - or take the more stable returns of cash rents as a landlord making a difference.
Ian Bailey head of Savills rural research adds, "Agricultural land has shown it is a tested store of value in inflationary environments. In addition, the returns from agricultural investments have a weak correlation with mainstream investments, which means agricultural property performs well when other assets show poor returns. This is an argument for including agricultural property in a mixed portfolio
, to reduce risk and also boost overall portfolio performance."
- Wednesday 19 January 2011