Investing in high performance agricultural land would be a "wise and ethical choice in 2012", according to some real estate agents.
Property Frontiers CEO Ray Withers highlights the importance of alternative asset classes such as farmland for the New Year:
"As an investor myself I always consider the fundamental elements of supply and demand behind any investment. Today the pressure we place upon our land is vast and global food shortages are cleanly apparent."
Indeed, with the global population rising fast, passing the 7 billion mark last year and large areas of farmland previously used for food production being transformed into fields of bio fuel crops, the pressure placed on our food supply is increasing. Even today's most prolific philanthropist Bill Gates has turned his attentions to the issue of global food shortages, funding the research, development and protection of agricultural lands and techniques.
According to the Knight Frank Wealth Report 2011, food and soft commodity prices have hit record heights in the UK, with wheat prices reaching £200 per tonne in 2010 as supply faces rising demand. As a result, the OECD estimates that production must increase by 70% before 2050 to satisfy global population growth and changing consumption trends.
Is farmland the new the green gold of 2012?
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.
For years cash-rich and land-poor nations have been purchasing agricultural land in overseas shores such as the US, Australia, Russia and South America. For many, including Withers, the vast farmlands of South America are the preferred choice due to the productive climate and soils. Politically calm and economically stable nations such as Uruguay have established and productive agricultural lands with foreigners owning up to 25% of food production land.
But this trend has sparked a desire for individual investors to own any slice of farmland, be it in the Yorkshire Dales or Uruguay.
Withers concludes: "Investing in high performance agricultural land, in the right location and via the right investment structure would be a wise and ethical choice in 2012."