Why Invest in Land?
1. Potential Rewards
Get it right and the rewards can be exceptional. When land is re-designated for development purposes its value dramatically increases. The percentage increase will differ from location to location, but it would be easonable to expect a substantial return on the investment if your land is re-zoned.
This chart shows potential uplift values only and not a forecast of profits
As the economy becomes more unsettled, investment land always has a substantial attraction to investors due to its historically steady performance in all economic conditions.
Government Forecast
The Valuation Office Agency, a government body and executive agency of the HM Revenue & Customs, reports that there appears to be little indication that the direction of the land investment market is likely to change. Investment land remains in strong demand, whilst the supply of investment land for sale remains well below that level of demand.
The graph above from the Government’s Valuation Office Agency forecasts the value of investment land rising for the next 5 years.
Land investment certainly isn’t a bubble waiting to burst and in these uncertain financial times land is still likely to appeal to investors looking for a safe home for their funds.
Knight Frank 25 June 2008
2. A Tangible Asset
Land can be seen, visited and walked upon. Unlike stocks and shares and other traditional investments, land is tangible. Investing in land with good prospects for gaining planning consent is exactly how many property investors have made their fortunes over the years. Even the most established blue chip stock can become almost worthless overnight due to company mismanagement, market forces and political changes. Recent history has proved this time and time again.
Your land will always be there.
Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full and managed with care, it is about the safest investment in the world.
Franklin D. Roosevelt
3. Supply and Demand
The demand for affordable housing in the UK is at an all time high due to the following forces;
- The population is growing at a staggering rate
- More single occupancy and split families
- Increased immigration
- People are living longer
- Increase in the number of house holds downsizing
- Ease of Entry
Source: Department for Communities and Local Govt. (CLG)
It goes without saying that there is not enough ‘residential development’ zoned land available to meet the driving demand for new housing. This is one of the primary reasons why the value of un-zoned land consistently appreciates and more importantly, is highly unlikely to depreciate.
The chart above shows that if current targets are to be met, over the next 12 years more than 5,000 acres of Greenfield land - including land currently designated as Greenbelt - will be developed for housing every year. This means that by 2020 over 60,000 acres will have been re-zoned. * Source: Department for Communities and Local Govt. (CLG) * Source: CPRE November 2008″
The best investment on earth….is earth.
Louis Glickman: Author, Attorney and Real Estate Tycoon
4.Ease of Entry
Investing in land is an extremely simple process. Unlike investments such as stocks and bonds etc, expertise in economics is not needed to understand why the value of land goes up or down.
Purchasing land requires a relatively small outlay. In addition, it often involves no maintenance costs and can remain untouched yet still experience an attractive rises in value.
In direct contrast purchasing property not only involves a much higher initial outlay, but typically involves furtherinvestment and high maintenance costs.
By dividing up larger sites into smaller (but individually usable) plots Perimeter Land has made land investment available to the ordinary private investor. Everyone now has the opportunity to build a land portfolio with the potential for making large profits.
There are no complicated concepts with land, just that there is an ever increasing demand for building land and a restricted supply of plots for sale.
All markets are driven by supply and demand. Britain needs millions of new homes. That is a fact.