Ru­ral prop­erty strength­ens in­vest­ment re­turn

The Peterborough Evening Telegraph - - Etbusiness Daily -

LAND is as­sert­ing its in­vest­ment pre-em­i­nence again, strength­en­ing its po­si­tion against other sec­tors.

That’s the view of Peter­bor­ough-based ru­ral di­vi­sion part­ner at Carter Jonas John Hen­niker-Ma­jor fol­low­ing the re­sults of the IPD (In­ter­na­tional Prop­erty Data­base) UK Ru­ral Prop­erty In­dex for 2009.

The in­dex mea­sures ungeared to­tal re­turn to di­rect in­vest­ments, and in 2009 the to­tal re­turn stood at 8.2 per cent, which was an im­prove­ment on the 2008 re­sult of 1.7 per cent.

Mr Hen­niker-Ma­jor be­lieves the re­sults re­in­force the re­cent flight to safety of­fered by ru­ral prop­erty, of­ten linked with gold as a “se­cure haven”.

He be­lieves that the eco­nomic storm clouds cir­cling the world economies will only heighten this sen­ti­ment, as gov­ern­ments tighten their belts and face up to the re­al­ity of re­duc­ing the crip­pling sov­er­eign debt.

While the ru­ral prop­erty sec­tor in­cludes a bas­ket of as­sets, in­clud­ing res­i­den­tial and com­mer­cial prop­erty, the land el­e­ment forms a sig­nif­i­cant pro­por­tion.

The value of va­cant pos­ses­sion land is con­tin­u­ing to strengthen and this will, in­evitably, in­crease the land in­vest­ment value as a con­se­quence.

Mr Hen­niker-Ma­jor said: “2010 is once again prov­ing that the de­mand for ru­ral prop­erty and, in par­tic­u­lar, land, is in­creas­ing with a fur­ther re­duc­tion in sup­ply into the mar­ket.

“This scarcity is likely to con­tinue in the medium to long term as in­vestors seek safety and, in re­al­ity, who would will­ingly con­vert ru­ral prop­erty into cash with the risk of where to in­vest the pro­ceeds?

“While some agents be­lieve val­ues are al­ready high enough, the sen­ti­ment in the mar­ket in­di­cates there is still fur­ther to go. How­ever, we also need to ac­knowl­edge and re­flect that all prop­erty sec­tors are cycli­cal and mar­kets do and will move in both di­rec­tions,” he added.

“While an­a­lysts point to com­mod­ity prices, in­put costs, en­ergy costs, sub­si­dies and in­ter­est rates as mar­ket shapers, the biggest and key in­flu­ence has to be scarcity.”

sup­ply and de­mand: John Hen­niker-Ma­jor dis­cusses the in­creas­ing de­mand and con­tract­ing sup­ply of ru­ral land.

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