Why Investment Land Should be Considered

Today I will discuss how investing in development land can produce surprisingly good returns. Idle money is under-performing money. Investing is a well-proven option for wealth accumulation over a working life. Investing in development land is a comparatively easy process with the right advice and is less volatile than some other asset classes.

Demand for Land is Only Going to Increase

Given that development land is a finite resource, and as Australia’s population and immigration steadily increases, there will be more demand for space; and  prices are going up at an ever increasing rate.

If you choose to invest in a growth area, there will be even greater demand for completed property and push development, and prices even higher. Therefore timing and selectivity can make a significant difference to returns from investing in development land.

Development Land is a Tangible Investment

Another advantage is that the development market is extremely unlikely to suffer shocks or pricing collapses like the stock market does for example. Investing in land is a tangible investment – it can’t disappear or fall to zero.

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Maintenance is Quite Easy

Unlike completed real estate, which needs constant upkeep and capital expenditure, development land is an asset class that needs very little maintenance outlay, either from wear and tear or the adverse events a structure could suffer.

The Return Potential is Amazing

The requirement for land is always there. With new businesses opening all the time, development, and construction activities tend to increase the market price value of development land. You can often double or triple the selling price depending on the demand.

Land has Fewer Competition

There is a usually less competition when considering buying development land compared to completed property, since real estate investors tend to flock to houses and apartments that can be rented, chances are that you will be facing less competition.

Therefore a managed fund that is continuously researching and conducting due diligence might be the a safer approach to access this asset class. For example, the Enhanced Land Fund and Premium Income Fund (both sub funds of The Guardian Investment Fund ARSN 168 048 057) invest in development land and subsequent property developments respectively, and provide the reassurance of a professional manager. For more information on these funds, see here.

 

Rod Mackay

Author Rod Mackay

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