When it comes to investment choices and opportunities, we all look to billionaires for guidance. After all, they have the funds to make virtually any investment they want and they usually have a team of experts to help them make smart decisions. So, when we see that billionaires are investing in farmland, it’s definitely worth paying attention.
Just consider this: based on the Knight Frank 2017 Billionaire Report, farmland was the third most popular investment for billionaires after art and real estate. The report also showed that the rate of farmland investment has increased by 60% in the last five years.
So, what’s driving this trend? Why are more and more billionaires investing in farmland? And does this mean that you should start looking for farmland for sale near Calgary? There are a few reasons why the wealthy are investing in farmland and we’ll explore a few of them here, including the potential for high returns, the hedge against inflation, and the role of farmland in a portfolio.
Meet the Billionaire Investors
Investment in farmland is not just a trend; it’s becoming a full-fledged movement led by some of the world’s richest people. Here are some names you might recognize:
One of the biggest investors in farmland is Chinese businessman Wang Jing. Wang has been buying up large tracts of land in Africa and South America, and he plans to use the land to grow food for his own country. Saudi Arabia’s Prince Alwaleed bin Talal and Stan Kroenke are also big investors in farmland, mainly for the purpose of food production.
The same goes for George Soros, most commonly known as “The Man Who Broke the Bank of England”, who has purchased over 1 million acres of farmland in Argentina. His goal is to help revive the country’s agricultural industry. He believes that the country has great potential for agriculture and hopes to help it reach its potential. Soros, together with three other billionaires— Carlos Slim, Bill Gates, and Warren Buffet—have teamed up in a farmland-buying venture called “The Grain Belt Express”. They have raised about $2 billion to purchase vast acres of farmland.
The founder of Amazon, Jeff Bezos, has also joined the list of billionaires investing in farmlands. He has purchased around 400,000 acres of land in Texas. Even real estate magnates such as Sam Zell and Jorge Perez are buying up farmland. Zell has acquired properties in Indiana, Illinois, and Iowa, while Perez has been acquiring land in Florida.
The Reason Behind this Billionaire Mindset
Billionaire farmland investors come from all different backgrounds. Some made their fortunes in technology, others in finance or manufacturing. It’s quite surprising that a growing number of the richest people in the world are investing in farmlands.
Why the sudden interest in agriculture? We can think of two compelling reasons.
Diversification is key to any good investment strategy.
As the upper class continues to grow their wealth, many tend to concentrate in a few asset classes— primarily stocks, bonds, and even art. However, this concentration leaves them vulnerable to market fluctuations.
And so, for many of these billionaires, farmland represents a new asset class that can help them diversify their portfolios. While stocks and bonds can be volatile, farmland is a more stable investment.
Farmland provides an opportunity for these investors to diversify their portfolios and protect their wealth from the volatility of the stock market.
Hedging Against Inflation
The prices of goods and services tend to go up over time. This is due to inflation, which results in the loss of purchasing power.
To hedge against inflation, some investors choose to invest in assets that are expected to increase in value at a rate higher than the rate of inflation. Farmland has historically been a good hedging tool against inflation.
What’s more, agricultural land is becoming increasingly scarce as the world’s population grows. There’s always a growing demand for crops and livestock that investors can either sell at higher prices or keep for themselves as a tangible asset to be passed down from generation to generation.
Many of these billionaires are buying up land in developing countries, where costs are cheaper and the potential for growth is the greatest. They’re also buying up land in the United States, where there is a growing demand for organic food.
By owning farmland, these investors can control the production of crops and ensure that they are getting the best return on their investment. Farmland offers them opportunities for long-term capital appreciation and cash flow. It can provide tax breaks and other benefits. Above all else, billionaires will always have secure access to food despite the population inflation and overwhelming food supply demands. Some even believe they can help create a more sustainable food system through farmland investment.
How to Invest Like a Billionaire in Calgary
Farmland for sale within and near the Calgary area is a good investment choice for several reasons. One of the main reasons is that the prices for land here are still relatively low compared to other parts of North America. While farmland prices in the United States have been on the rise, Canada’s farmland prices have been relatively stable. In 2018, the average farmland price per acre in the U.S. exceeded $4,000, while the average price in Canada only exceeded $3,000. Particularly in Calgary, Alberta, the price is only around $3,164 per acre in 2021 according to Statistics Canada. This is the fifth cheapest average price compared to other Canadian provinces like Quebec and Ontario with farmland acre values that can reach up to $7,838 and $13,813 respectively.
Think you’re ready to start investing in farmland like a billionaire? Here are a few things to keep in mind.
Do Your Research and Understand the Market Conditions
Farmland is a long-term investment, so you’ll want to do your due diligence and understand the market conditions in the area where you’re thinking of investing.
Once you’ve done your research and have a good understanding of the market conditions, you’ll be in a better position to make an informed decision about whether or not investing in farmland is the right choice for you.
Be Prepared to Weather the Ups and Downs
Like any investment, there will be ups and downs when it comes to farmland.
The key is to be prepared for the lean years and have a long-term outlook. If you’re able to weather the occasional down year, then investing in farmland can be a very rewarding experience.
Work With a Qualified Professional
Investing in farmland can be a complex process, so it’s important to work with a qualified professional who can help you navigate the market. A good land broker will have their finger on the pulse of the Calgary market and can help you find the right piece of farmland for sale to invest in.
So what do you think? Is investing in farmland something you’re interested in? If so, contact us at Hansen Land Brokers today and let’s start the conversation.
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