The rapid rise of farmland prices and the potential for timber investment

Farmland around the world is proving to be an excellent investment, with impressive and steady increases in value. Looking at UK farm land, Knight Frank revealed in their 2014 Agricultural Investment Overview that “in 2013, the average value of English farmland hit a record high of £6,882/acre,…. taking 10-year capital growth to an impressive 210%.” They added that, “the UK’s leading equities (+51%) have lagged well behind the performance of farmland over the past 10 years and even prime central London residential property (+132%) has not kept pace.” Farmland’s gains over the decade outshone those of the FTSE 100 index and even prime London property – an impressive statistic.

Research from Savills, reported in the Telegraph, backed up these claims stating the “rising global food demand, climate change and foreign investment attracted by liberal British land ownership laws have helped to make a hectare of British farmland bought in 2002 one of the best performing investments in the country”.

As specialists in Uruguay, we have seen interest increasing in agricultural land here as well, particularly from international investors looking for a stable, secure and tangible investment in uncertain times. Farmland prices rose steadily since 2005, jumping 11 fold to a record in 2014. In addition, there is favourable tax legislation for farming, with a flat 25% income tax rate, no asset tax and low property tax, which makes it very appealing as an investment. It is easy to evaluate the quality of the land you’re buying too, as the whole of Uruguay is mapped and evaluated by the CONEAT Index, which is a soil map showing productivity. All these factors combined make Uruguay a particularly good place to invest in farmland.

In 2015 and 2016 prices decreased to a very attractive level, due to China’s slowdown and the drop in commodity prices. For the first time in a decade, there have been declining prices of up to 40% for cattle land and 25% for general agricultural land, from the 2014 peak. This opens up real opportunities for investors looking to create new forestry plantations to fill the demand created by the world’s two largest paper mills in the country. This is an excellent time to snap up quality land at very low prices and grow a very profitable crop – eucalyptus. We expect the prices to stop dropping this year and return to their upward trend, so now is a great time to invest.

JP Forestry Investments are investment specialists offering eco-friendly, secure and tangible forestry investments in Uruguay. We can help you make the most of the decrease in farmland prices and allow you to invest in this very profitable area at a highly attractive price. Fill in your details in the form below to receive our free forestry investment guide and find out more about this exciting investment opportunity.

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