News Farmland
US investors are flocking to agricultural land
Investment funds in the United States are pumping a record amount of dollars into agricultural land. They are looking for stable investment opportunities and land offers that ideally. In less than ten years the value has more than doubled.
According to figures from the NCREIF – the American organization that, among other things, keeps track of figures on real estate investments in the country – investment funds and private investors have invested a total of $2023 billion in agricultural land up to and including 16,6. This equates to €15,3 billion. This is more than double compared to 2020, when investors had $7,4 billion in agricultural land, writes the FT.
Up to 3% in investor hands
The position of investors is significant when looking at the dollars. This is different in absolute figures. According to the USDA, between 1% and 3% of all U.S. farmland is now in their hands. More than 95% of all land is still owned by family businesses. The total land market in the US is worth $3,4 trillion.
Investors who got in on time have seen a significant return on their investment. In 2023, the average land price was $5.460 per acre (converted €12.434 per hectare). That was half in 2006. So those who got in on time saw their investment increase significantly in value.
Arable farming popular
According to investment specialists, it is not surprising that investment funds in particular are pumping billions into the sector. It is inflation-proof, stable in value and the returns are excellent. Everything is built on the scarcity of agricultural land, which is only increasing due to the increasing population worldwide. Arable land in particular is popular with the funds. In the US, wheat, corn and soy are grown there. The availability of water is also important.
Since the 2008 financial crisis, funds have been busy diversifying their portfolios. Partly to be more independent of the real estate market, which is subject to fluctuations. Agricultural land is not included. Private investors have also moved in that direction.
162 million hectares
Investment specialists don't think farmland investment is declining anytime soon in the US and Canada. Just like in Europe, the agricultural sector is aging. The average American farmer is 58 years old. This means that 162 million hectares of agricultural land can and will change hands in the next ten years. Investors are happy to respond to this.
Niels van der Boom
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