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Strategic Land Investment Versus Stock and Bond Markets – A Comparison

Investors are looking outside of stocks, bonds and REITs for better returns. But the alternatives, real assets such as strategic land, defy apples-to-apples comparisons.

Author: Chris Westerman
Date: Sep 27, 2013 - 8:02:12 AM

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How Do Traditional Investments – Stocks and Bonds – Compare to Strategic Land Investing?

Investors are looking outside of stocks, bonds and REITs for better returns. But the alternatives, real assets such as strategic land, defy apples-to-apples comparisons.

The performance of stocks, bonds and REITs (real estate investment trusts) is based partly in the companies they represent and partly in overall market trends. This has proven to be dissatisfying to many investors in recent years because, net-net, those types of investments have shown little overall growth amidst a sea of financial volatility.

An alternative, strategic land investing, is attracting disenchanted investors because, simply, such investments are able to outperform the securities traded on the London Stock Exchange, the New York Stock Exchange, the SEHK and other trading organisations.

What makes for this difference? Why would an investment in land be advantageous over something as apparently similar as a REIT? And doesn’t the general health of the economy affect demand for land in a similar fashion to demand for stocks. These are important and natural questions, best understood by considering the following premises:

• Strategic land versus REITs – Most real estate investment trusts hold commercial property such as office buildings, retail centres and warehouses. Strategic land, however, is primarily made up of acreage that is unbuilt but ripe for municipal repurpose designations. The strategic land fund, a conglomeration of investors working in partnership with land acquisition and development professionals, will purchase the land and improve its value by various means such as rezoning and infrastructure development (“land site assembly”), then sell the property when its value is sufficiently increased (often, within two to five years).

• Strategic land versus stocks and bonds – Investors in market-traded securities follow trends, which often supersede the intrinsic value and worth of individual companies. REITs, also traded on the exchanges, are subject to the same generalisations. But strategic land values rise and fall on the acumen of investment property specialists – in how and when they purchase property, their success at rezoning, skill at cost-effective infrastructure construction and identifying the optimal time to sell.

• Strategic land relative to the general economy – The general economy may be in the doldrums, yet specific tracts of land in select locations might concurrently be highly desirable due to area-specific factors.

These are each reasons why strategic UK land investment specialists hold great value with their investors. But before you embark on a strategic land investment, speak with your personal financial advisor who understands your own investment goals, timeframes and tax considerations.

An alternative strategic land investing is attracting disenchanted investors.These are each reasons why strategic UK land investment specialists hold great value with their investors.

View all articles by Chris Westerman

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