| LAND INVESTMENT IN THE UK - Eight Things
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| | Investing in land is the most lucrative
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| Smart Investors Know
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| | means of capitalising the UK's housing
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| 27th March 2007
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| | crisis. Supply pressure is being felt in
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| Author: Leonard Montgomery
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| | both affluent and less affluent areas up
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| UK land represents some of the best
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| | and down the country. The number of UK
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| investment land available. These eight
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| | council homes has fallen sharply over the
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| facts, presented by a land planning and
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| | past 25 years, while homes rented from
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| land investment expert, will tell you
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| | social landlords has increased
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| what wise investors already know about
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| | dramatically, and owner occupation has
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| investing in land
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| | doubled.
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| 1) Investing in UK Land is a real asset
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| | The combined effects of the above factors
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| You can see, use, and most importantly,
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| | make investing in land a sensible choice
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| build on investment land. You hold the
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| | when allocating assets in a UK investment
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| legal title deeds to your investment land
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| | portfolio.
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| as surety. There are no complicated
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| | 6) Investing in land is passive and
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| concepts in land investment, just a
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| | hassle-free
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| burgeoning demand for a finite amount of
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| | All UK investments demand careful
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| UK land.
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| | consideration when entering and exiting
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| 2) Investing in Land yields strong
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| | the investment. However, some UK
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| returns
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| | investments also demand active management
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| A finite supply of UK land partially
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| | during the life of the investment (e.g.
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| explains its historically rising value,
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| | equity and commodities trading). Land
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| and implies it is unlikely to depreciate.
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| | investment, on the other hand, is
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| Mark Twain said, "If something is unable
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| | entirely passive, which makes it popular
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| to be manufactured and the underlying
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| | with many investors. Investment land is
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| demand for it is constant, then its value
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| | easily managed and investors should be
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| will tend to rise." Demand for UK land
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| | fully apprised of their investment
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| is, at the very least, constant. The
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| | progress.
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| property market increases reflect soaring
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| | 7) Land Investment has low volatility of
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| demand for houses from an ever-growing
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| | returns
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| population. Therefore, investing in UK
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| | Volatility of land investment returns is
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| land offers strong returns. It is
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| | an important consideration. It refers to
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| reasonable to achieve the equivalent of
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| | the extent to which the value of the
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| 30-35% annually in a 5-year land
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| | investment rises and falls in its
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| investment project. This equates to
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| | lifetime. Less volatility makes it
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| compounded returns of around 400-450%.
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| | easier for the investor to know their
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| Such returns are hard to realise with
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| | wealth at any given time.
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| other UK investments.
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| | UK Land investing is not volatile and is
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| 3) Land Investment is an investment in
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| | actually relatively predictable. The
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| "the real world"
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| | value of a land investment tends to
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| The value of property assets is clear and
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| | follow a linear path: in a 4-5 year
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| transparent. This is not the case with
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| | project, the value of the land investment
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| all UK investments, such as derivatives.
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| | in years 0-3 will tend to rise relatively
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| Even with traditional equity investments,
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| | modestly by the effect of 'organic
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| the average investor rarely knows whether
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| | growth', (what we commonly term
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| the equity is genuinely under-valued (buy
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| | 'inflation'). The land investment
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| signal) or over-priced (sell signal).
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| | typically rises sharply in value during
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| Stock market scandals resulting from
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| | years 4-5 (should permission to build on
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| accounting malpractice highlight the
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| | the land be achieved). The land
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| limitations of the average investor's
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| | investment may be divested of at this
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| understanding of their exposures. UK
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| | time for maximum profit.
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| land investors are usually already active
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| | The wise investor knows that they can
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| players as homeowners, so they already
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| | more easily estimate the future value of
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| have some market experience.
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| | their portfolio with land investments
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| 4) UK Land has a lower entry point
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| | than with other asset classes. The land
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| compared with buy to let
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| | investor can plan for critical future
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| The price tag on a typical UK property is
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| | funding requirements such as school and
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| around £200,000. A plot of UK
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| | university fees, retirement planning, and
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| investment land that offers substantially
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| | health care expenses. More concrete
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| larger relative returns is priced at just
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| | future planning may not be so easy if the
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| around £10,000! Remember that the Iron
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| | investor has exposures that are more
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| Law of Investment is diversification,
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| | volatile than investing in land.
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| commonly known as "Don't put all of your
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| | 8) Investing in land creates real wealth
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| eggs in one basket." Because land
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| | by compounding returns
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| investment has a significantly lower
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| | As we have seen, returns of 400-500% in a
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| entry level than property, wise investors
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| | 4-5 year project cycle are entirely
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| can more easily practice the Iron Law.
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| | possible if an investor chooses good UK
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| A typical UK investment requires around
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| | land and an experienced land investment
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| £200,000 but a diversified land
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| | provider. Therefore, an initial
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| investment portfolio could be created for
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| | investment of £10,000 could grow to
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| less than £50,000! Investing in land,
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| | £50,000. If these returns are then
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| with its lower entry point, therefore
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| | reinvested into another land investment
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| gives the investor more 'chances' to pick
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| | project with comparable returns, then the
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| a lucrative UK investment. However, it
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| | initial land investment could grow from
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| is by no means essential to build a huge
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| | £10,000 to £250,000.
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| portfolio of land investments: the key
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| | Some of the most successful individuals
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| considerations for anyone considering
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| | are enjoying the financial benefits from
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| investing in land are two-fold: choosing
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| | compounding in land investment. This
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| good quality UK land, and choosing a good
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| | approach requires a slightly longer-term
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| land investment provider. The 12 Land
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| | view, but the rewards are significant.
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| Investment Guidelines, located at will
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| | Compounding in land investment can offer
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| help you make these two choices.
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| | more than just good investment returns:
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| 5) Investing in Land capitalises on UK's
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| | it can create very substantial wealth!
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| housing crisis
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