Fortune Reports Soros and Rothschild Invested in Land

As millions of landowners already know, investing in a piece of property does more than just bring piece of mind. It can bring an excellent return. This story is one worth repeating, particularly in today’s economic climate when Americans have witnessed the demise of blue chip investments such as AIG, Bear Stearns, and Circuit City.

But landowners aren’t the only ones with an eye to a good return. As the following article from Fortune attests, some of the world’s savviest investors recognize the potential for substantial returns, including hedge fund manager George Soros and banking scion Jacob Rothschild.

Pay particular attention to the paragraphs that focus on Shonda Warner, an ex derivatives trader for Goldman Sachs who launched Chess Ag Full Partners, an investment firm that acquires undervalued farmland.

In exchange for a seven-year lockup, a 2% management fee, and 20% of profits, she figures she can deliver the investors in her first fund an annual return of 13% to 16% – about 4% to 6% from crop yields, around 8% from land appreciation, and the rest from hedging.

Based on historical returns for farmland, that’s an attainable goal. According to research by Terry Kastens and Kevin Dhuyvetter, professors of agricultural economics at Kansas State University whom Warner recruited to be advisory partners in her fund, the average annual return on U.S. farmland since 1950, including crop yield and land appreciation, is 11.5%, vs. a 12% annualized total return for the stock market. And the farm returns actually came with about half the volatility of stocks.

Read more at:
“Betting the Farm,” Fortune, June 10, 2009.

Largest Drop in Rural Land Prices Worldwide? The Ukraine

According to this ABC Australia report, land values around the world are plummeting. The hardest hit country? The Ukraine.

The value of rural land in the Ukraine has plummeted a staggering 75 percent. The Australian news report indicates that the basics of the problem are the same there as everywhere else: thanks to the credit crisis the previously well-lined pockets of investors are no more. The report also references, but does not detail, a 5 percent drop in land values for the United States and Great Britain.

Brazil to Issue Deeds to Thousands of Landowners in the Amazon Basin

Brazilians have long feared that foreigners were exploiting great expanses of the Amazon River Basin, a story we covered earlier this year when the Brazilian government began to investigate unlawful land sales to overseas interests. Now the country has established a program to ascertain ownership of farms of all sizes and streamline the process by which landowners can get deeds to their property. The root cause of this initiative? Less than 4 percent of privately owned land in the Amazon is actually deeded. Read more

Mexico Opposes Ethanol

As we’ve seen over the last few months, skyrocketing commodity prices are pushing land values to record levels. They are also squeezing cattlemen and other producers who rely on corn and other grains to fatten livestock and poultry. One of the loudest voices protesting this trend has been Texas Gov. Rick Perry, who petitioned the EPA to grant a 50 percent waiver on the 9 billion gallon corn-based Renewable Fuel Standard. Now another vocal opponent of ethanol has emerged: south of the border. Read more

678,000 Acres for $20 Million?

For the price of a penthouse overlooking Central Park, an investor could also buy 1,000 square miles in Brazil. Prices such as this listing in the Amazon River basin’s Madeira River are one of the many reasons that many are looking overseas as well as here in the U.S. But as this article in The International Herald Tribune points out, price is only one of the considerations when purchasing in a foreign country. Read more