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Scala: Buy Land to beat the UK slump

Jaimie Kanwar

UK house prices may be falling, but the Scala Land Group has a solution for investors, who can capitalise on rising land prices...

According to the Halifax, Britain's average home was worth £191,566 in March 2008, compared with £194,094 a year ago. The Association of Residential Letting Agents further reported that in February 2008, rental prices for flats had risen by a below-inflation 2%.

This is not good news for anyone investing in property for capital gain, and buy-to-let landlords may be disappointed if they hope to see rent increases compensate for depreciating assets.

Falling property prices are also developing into a problem for other UK Investment hotspots. Statistics from the Spanish Housing Ministry (as reported by kyero.com) show that the average price of a Spanish home fell from €249,000 to €240,000 between March 2007 and March 2008.

Furthermore, MSN news recently reported that in the final quarter of 2007, Florida property values fell 4.7%. Anecdotal evidence even indicates that the seemingly impervious Bulgarian property market is also suffering from a slowdown in house price rises.

So where now should the property investor look? The Scala Land Group believes that it's time to go back to basics and look at land, specifically, UK Greenfield land, the price of which has continued to grow handsomely through 2007/08.

There are three factors that explain why buying Greenfield land is a worthwhile opportunity:

• Improving agricultural incomes mean that farmers are buying more land.
• Land is an attracting lifestyle buyers and city investors.
• There is a demand for more land for housing.

The chart below illustrates the growth in value of Greenfield Land over the last 4 years:

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For more information on land investment click here

Land is a finite resource and demand is high, which is the classic scenario for price increases. But the other aspect to consider is the fact that Gordon Brown's government is dedicated to building 3 million new homes by 2020.

Homes need land and – depending on which expert you listen to – between 1.2 and 1.8 million of those will be built on Greenfield land. If you buy land that subsequently receives planning permission for residential development, you can expect the value of that land to rise significantly. And land that may one day be suitable for future development is just what Scala Land Group offers.

There's a lot more detail and information about adding land to your portfolio on Scala's website and in their brochure. Just contact them to talk through how land might help you make capital gains at a time when house prices are falling.

To receive a land investment brochure, please click here.