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You may be considering investing in real estate, and why wouldn’t you? Real estate investment has long been considered a stable and lucrative option for diversifying one’s portfolio. However, traditional real estate investment can be pretty limiting. Farmland, often overlooked in favor of more traditional real estate investments, is increasingly gaining recognition as a valuable alternative real estate investment. Agriculture investment offers an exciting and sustainable path to diversify your portfolio while reaping the benefits of a steadily growing industry. Let’s delve into why farmland is an excellent alternative real estate investment and why investors are paying attention to this sector.

Interest in Alternative Real Estate Investment is on the Rise

The fact that an alternative real estate investment might be a helpful addition to conventional investing plans is becoming increasingly apparent to investors. The subject of alternative real estate investing is expected to keep expanding. Alternatives can give clients better results and greater trust in their investments because they typically have minimal correlations with traditional asset classes like stocks and bonds. Farmland has a long history of positive returns and low volatility, especially during economic downturns.

Examples of Alternative Real Estate Investment Types

 

  1. Multifamily Properties: Investing in properties like apartment buildings can be lucrative. They offer multiple income streams through rental units, and investors can benefit from economies of scale.
  2. Commercial Real Estate: Commercial real estate, including office buildings, retail spaces, and industrial warehouses, provides the potential for high returns, but it often requires more active management and expertise.
  3. Real Estate Investment Trusts (REITs): REITs are a way to invest in real estate without directly owning property. They offer the benefit of liquidity and diversification but are still subject to market volatility.
  4. Vacation Rentals: Investing in vacation rental properties through platforms like Airbnb or Vrbo can generate substantial short-term income. However, they are a more labor-intensive type of alternative real estate investment as they come with the challenge of seasonality and property management.
  5. Storage Units: There is an increasing need for storage space, and these facilities have affordable operating expenses. Additionally, since consumers frequently downsize or need temporary storage during economic downturns, storage units offer a recession-resistant investment.

Comparative Analysis

Risk and Return

Farmland investments are generally lower risk than alternative real estate investments due to their stability and limited correlation with financial markets. However, they may offer more modest short-term returns than riskier real estate ventures, such as commercial properties or vacation rentals.

Liquidity

Alternative real estate investments, like REITs or multifamily properties, often offer better liquidity than farmland. Selling a farmland asset can be time-consuming and may not yield a quick return.

Active vs. Passive Management

Farmland investments are passive by nature, making them ideal for investors seeking a more hands-off approach. In contrast, an alternative real estate investment, such as multifamily property, often requires active management, which can be more time-intensive.

Income Generation 

Agricultural investments typically generate consistent, long-term rental income. Other alternative real estate investments, such as vacation rentals, can provide higher short-term cash flows but are subject to seasonality and market conditions.

Passive Income 

Like real estate rental income, agricultural investments can generate passive income. You can lease farmland to agricultural operators or invest in farming projects managed by professionals, providing you with a steady income stream without the need for active management.

Farmland as a Favourable Alternative Real Estate Investment

Tangible Assets with Less Volatility

Agriculture investment involves owning and operating farmland or investing in agriculture-related businesses. Farmland is a tangibly valuable asset. It produces crops and is a fundamental resource for the world’s population. This tangibility sets it apart from other real assets and provides a level of security that is often overlooked. Unlike traditional real estate, which often faces market fluctuations, the value of agricultural assets tends to be more stable. The demand for food, fiber, and biofuel production remains constant, providing a consistent source of income.

Global Opportunity

One of the most compelling reasons to consider farmland as an alternative real estate investment is the opportunity to invest overseas. Investing in farmland is not limited to a specific geographical region. Investors can diversify their portfolios by selecting farmland in different countries and climates. This worldwide reach helps lessen the dangers of variations in local economies. Also, as agricultural products are primarily exported, investors are exposed to multiple markets, which gives added protection. 

Inherent Inflation Hedge

Inflation erodes the value of money over time, but farmland tends to appreciate as the cost of goods and services rises. As food prices increase with inflation, the value of farmland and its income potential also tend to rise, making it an adequate safeguard against currency devaluation. Agricultural investments hold their value well during economic downturns or market volatility. This ability to withstand financial turmoil can serve as a hedge against market uncertainties, helping to protect your overall portfolio.

Positive Environmental and Social Impact

Investing in agriculture generates financial returns and contributes to positive environmental and social outcomes. Sustainable farming practices can enhance soil quality, reduce the carbon footprint, and support local communities. Farmland investment can contribute to environmental and social goals, further enhancing its appeal as a rewarding alternative real estate investment. Agricultural investors can take pride in their role in fostering environmentally responsible practices. 

Tax Benefits

Farmland can provide investors with various tax benefits, such as deductions for depreciation, interest, and property taxes. Additionally, some governments offer incentives for conservation and sustainable farming practices, which can reduce tax liabilities for landowners.

Long-Term Capital Appreciation

Farmland historically experiences consistent long-term capital appreciation. The limited supply of arable land and the increasing global population create a scenario where the demand for farmland is expected to remain strong. As the worldwide market for agricultural products continues to rise, the long-term appreciation potential of agricultural investments is substantial. The value of farmland has historically appreciated steadily, making it an attractive asset for wealth preservation and generation.

Agro Invest Spain’s Alternative to the Alternative

 

Producing food in a harmonious way as an essential commodity sets farmland ahead of all other alternative real estate investments. When you choose a reliable farmland investment company like Agro Invest Spain, you generate high returns while making passive income and reaping long-term rewards. 

Agricultural land for sale in Spain can be easily accessed through our comprehensive farmland investment opportunity. We secure quality land on your behalf to plant almond trees. We then manage every process from planting to harvesting so you have a stress-free experience and can watch your money grow. Investing in environmentally friendly farms, such as our almond farms for sale in Spain, makes financial sense because you are extending the life of your land via the application of sustainable practices. As the trees grow, they add value to your land, increasing the value over time. In reality, the long-term crop structure means that your agricultural property will have a large added value if you decide to sell it. Can you think of a better alternative real estate investment than one that provides nourishment, ecological benefits, and great financial rewards?

Conclusion

Farmland is emerging as a compelling alternative real estate investment. It is an excellent substitute for traditional real estate, offering tangible assets, inherent inflation protection, and the potential for passive income. With the world’s growing population and increasing demand for food, agriculture investments are well-positioned for long-term appreciation. By diversifying your portfolio with agriculture, you can reap the financial benefits while contributing to positive environmental and social impacts. Investors can change the world; now is a crucial time to make an impact.

Do you want to start investing in an unparalleled alternative real estate investment to expand your portfolio? To find out if our investment approach is a good fit for you, contact a member of our investor relations team at Agro Invest Spain today. 

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