Alternative Investments Explained: Types of land investment

Alternative Investments Explained: from farming to gems and stones, breaks down the alternative products vying for your cash and assesses which assets are worth taking the risk.

This week, Alternative Marketplace digs up advice on investing in land. Does profit grow on trees? And how can you get at it?

Land investment effectively falls into two camps: investing for capital appreciation and investing for yields. Each strategy goes with their own type of land: building plots and agriculture,

Investing for capital appreciation will involve buying a plot of land for construction. You may choose to carry out the construction yourself, or via a building firm, but one thing is certain: the land will require planning permission first. Land with planning permission is more valuable than land without, which is where the appreciation part comes in:

While land’s value takes a large leap when permissions are attached to it, it can be risky to buy land without permission – there is no guarantee, of course, that it will be granted. But once permissions are in place, the value of the plot will naturally grow over time, particularly if you buy land at the point where the market has recently bottomed out. After several years, if you do not plan to build on the land yourself, you can always sell on the whole thing or individual plots to other interested investors. This is one of the main advantages of land investment; there is a wide array of exit strategies.

For yield-driven investors, agricultural land is another long-term option: the world’s population is consistently growing, driving up demand for resources such as food and farmland is the only way to produce it. With a finite supply of land in the world, farmland values are guaranteed to continue rising. This opens up the option for capital appreciation investment, but much traditional is to invest in farmland that is used to produce materials, such as bamboo, and receive a percentage of the profits made.

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