Tag Archives: green
Who’s In For Property Investment?
Last Updated: 23 September 2013Article by Jason Green and Paul Harben Collas Crill Jersey The latest survey from the Royal Institute of Chartered Surveyors has revealed a surge in demand for UK property and the fastest rise in house prices since their peak of seven years ago and a surge in demand for UK property. RICS are not alone in claiming that investors are clamouring to return to the property market. This month’s London Residential Review, produced by Frank Knight, also showed that international investors are driving investment in prime residential property. For overseas investors, the weak pound and low interest rates have driven capital growth in house prices considerably. Taking currency fluctuations into account, Knight Frank is predicting double-digit growth in capital for investors from Europe, USA, Middle East and Asia. For sterling investors, the anticipated growth is 26% – somewhat better than the meagre rates being offered on cash right now. RICS said that although London and the areas around it continued to see the biggest price increases, every region saw prices rise. July saw an acceleration in the housing market recovery that has been running for some time. The growth was seen across the UK. The recovery might have been initially focused in the south-east, but is spreading across the country. RICS particularly saw growth in the west Midlands and the North East, areas which have suffered more than most since the market crash. It is not unusual for us to see our clients achieving double digit income returns on residential property investments. One recent client even expects to receive an income of 15-18% from his buy-to-let. Colliers International also see sustained growth and returning investor confidence in the commercial property market. In its real estate investor forecast, Colliers predicts steady income returns as well as 0.5% rental growth and 3.4% capital value growth. Again, international buyers are playing a major part in the UK commercial property market and they are venturing beyond London to the regions in search of yield. Dougie Lawson, of Lawson and Partners, a property investment and asset management consultancy practice, said: ‘There are many opportunities available for investors to diversify their portfolio. It is possible to buy an “institutional grade” investment property for less than £1m. and with less than £0.5m. with debt.’ Notably, we have recently acted for a number of investors, together with Lawson & Partners, who have purchased commercial investments from Lateral Property Group, one of the UK’s most active developers of food stores, retail units and restaurants. Steven Redgrave, managing director of Lateral, said the company had achieved notable success, completing 34 development projects in the food store, retail and leisure sectors in the past four years, and with a ‘substantial’ forward pipeline. Specifically, Lateral has completed and sold 16 convenience stores in the UK, with eight more due to complete this year. The stores are pre-let to Tesco, Sainsbury’s or Morrisons, generally on 20-year leases with upwards-only reviews, pegged to RPI. A current example as illustrated is a Tesco Express, which is under offer at 6.25% in Peterborough off an initial rent of £47,500. We are helping property investors on the ground here in Channel Islands through the entire process of buying, selling and refinancing UK property. We have a really strong network and can introduce clients to key people including be agents, surveyors, or property tax accountants to make the entire process absolutely seamless. As people who love property, we are always happy to talk all things property. Continue reading
Adding Up Farmland Value Factors
http://www.agricultu….jpg&type=admin Jeff Caldwell 09/17/2013 Death and taxes. The old saying is those are the only two certainties in this world. And right now, that’s especially true for the farmland market. There’s not as much land going onto the market for sale right now — for a few reasons — and that calls for anybody looking to add acres to their farm to always be ready to pull the trigger, says one farmland market expert. The proposition of buying or selling land, especially the latter, is typically an emotional one, and as such doesn’t always follow market fundamentals and dynamics in lockstep. So, in lieu of a textbook for how to approach buying land when considering these factors, it’s important to always be ready when the time arises that circumstances dictate a seller to pull the trigger, says Randy Hertz, accredited farm manager and land consultant with Hertz Farm Management, Inc. “Certainly, you need to be in buying position. As people get panicky, they may be willing to take a lower price or offer lower than the general public really would anticipate. It’s an emotional decision,” he says. That emotion is typically manifested directly in how buyers approach potential land buys from sellers who, whether it’s the settlement of an estate by multiple stakeholders or a retirement, may be facing just as emotional a set of circumstances themselves. Combine that with the fact that buying land is a long-term decision, and it can make it tough to forecast how any given land sale will shake out. Then, add on to that variables specific to years like 2013, namely whether the land was planted or laid idle because of adverse weather, and sale prices are tough to peg. All this adds to the importance of staying in that buying position, Hertz says. “As the markets go against you, it’s an angst. As prices go up, you feel good about things. There’s a lot of prevented-planting acres this year. In those areas, it certainly was negatively impacted by the emotions of struggling crops,” he says, adding that a recent Iowa land sale netted a lower-than-expected price because it hadn’t been planted in the spring because of the weather. “People get bullish at the top. People overstay the market. Farmers are notorious for this. They ride it up, ride it down, and right at the bottom, freak out and sell in the bottom third of the market. “It’s such an imperfect market,” he adds. Right now, a major factor playing into both the amount of land going up for sale and the price volatility those sales yield is the state of the economy, both on the macro level and in the ag sector. In the former, taxes and return on investment are huge factors. Farmland remains a solid investment compared to equities, and with the tax implications of selling land as they are right now, it makes it easy to hold on, even if the climb in land values is seen tapering off. “There are just fewer farms on the market now. The reason for that is when you’ve got a land market that increases in value, people don’t want to pay taxes on that increase. And, you’ve got low interest rates. They say ‘I’m earning 3% to 3 1/2% on rented land. What would I do if I sold? I’d have to pay tax on $9,000/acre in capital gains,” Hertz says. “You’re going to pay one-third of that in taxes, plus the privilege of 1% on a CD. So, you’ve seen a lot fewer farms for sale. Ones selling are ones stepping up in basis, estates or families fighting.” More specific to the ag sector, crop inputs and cash land rents will continue to drive where sale prices wind up moving forward. The former group influences the direction of the latter, and how close rents have kept up with the general fluctuation of land values will help determine the willingness of landowners on the fence to sell land. “The dynamics of the farm market, specifically inputs have rocketed. Cash rents have not kept pace with the profits farmers have gotten. People are wondering what will happen with cash rents,” Hertz says. “If you had not increased along with where it should’ve been, you probably should’ve gotten an increase. If you were pretty good but not at top of the market, rent will probably be pretty good next year. If you were at the high for cash rent last year, probably adjust downward.” Specific to the last few years in the heart of the Corn Belt, the shape of the current crop on top of how sharply the land market’s fluctuated in the last five years will likely contribute to how it flexes and moves in the future, Hertz says. That’s clear when comparing past moves in key states in the region. “Illinois and Indiana are really strong right now. They’ve got a good crop coming, and they have been somewhat toned-down in their increases. Certainly not as fast as the increases Iowa has seen,” he says. “You’re going to see some adjustments like that.” And while he fully expects the general rise in farmland values to taper off in the coming year, Hertz says current strong grain prices will likely keep the market out of the red, even if this year’s crops don’t amount to earlier expectations. “How could you ever look a gift horse in the mouth? We can sell new-crop soybeans for over $13/bushel cash. Those are phenomenal prices. Yes, we’re going to get kicked in the shorts with our soybean yield, but you still have to sell the stuff,” he adds. “You’ve still got to make a decision.” Continue reading
Tips To Handle Today’s Farmland Market
http://www.agricultu….jpg&type=admin Jeff Caldwell 09/23/2013 Looking for proof the farmland market is starting to plateau? Look no further than the fields of Iowa, where the often-foreshadowed plateau in land values seems to be reaching fruition, at least in parts of that state, new information shows. Iowa has seen a meteoric rise in land values in the last few years, some say more so than other Corn Belt states. Now as the costs and returns for a crop start to converge and factors like taxes start to compel landowners to keep their hands on their land, prices are starting to hit the plateau experts say has been on its way for months. “The dynamics of the farm market, specifically inputs, have rocketed. Cash rents have not kept pace with the profits farmers have gotten. People are wondering what will happen with cash rents,” says Randy Hertz, accredited farm manager and land consultant with Hertz Farm Management, Inc. “There are just fewer farms on the market now. The reason for that is when you’ve got a land market that increases in value, people don’t want to pay taxes on that increase. And you’ve got low interest rates. They say ‘I’m earning 3% to 3 1/2% on rented land. What would I do if I sold? I’d have to pay tax on $9,000 an acre in capital gains. You’re going to pay one-third of that in taxes, plus the privilege of 1% on a CD. So, you’ve seen a lot fewer farms for sale.” Recent data show that three crop-reporting districts of Iowa — the Corn Belt state that’s seen the greatest volatility in land price shifts in the last few years, Hertz says — saw a tapering-off in their climb in value: Northeastern, southwest, and west-central Iowa. Much of that slump has come as a result of commodity prices slipping, interest rates, taxes, and a continued lack of “stable alternative investments.” This is compelling landowners to hold tighter onto their land in many cases, says Kyle Hansen of the Iowa Land Realtors Institute, leader of a statewide survey of farm managers, rural appraisers, and ag lenders. The leveling off in land values isn’t quite yet reaching every corner of the Corn Belt, though. Even if prices stay in the black for the coming few months, that doesn’t mean the reversal in Iowa won’t spread to other major corn- and soybean-growing parts of the nation’s center. “These prices are not at the level of increases we’ve seen in recent years, but they are still upward,” says Dale Aupperle, a farm manager with Heartland Ag Group in Forsyth, Illinois, and chairman of the Illinois Land Values and Lease Trends project, which recently conducted a similar survey of land values in that state that showed values are still climbing, but leveling off in their rise. If the boat does tip, and values do dip into the red, how far might things go? “While most bankers expected farmland values to remain at current levels, an increasing number of respondents felt farmland values may have peaked. Compared with previous surveys, fewer bankers expected farmland values to keep rising. More bankers also expected farmland values to drop after harvest likely due, at least partially, to expectations of lower farm income,” says Nathan Kauffman, economist with the Federal Reserve Bank of Kansas City. “Among bankers anticipating a decline, though, a majority of estimated farmland values would fall less than 10% during the next year. Very few bankers expected that farmland prices would drop more than 10%.” So, what should you do? Hertz recommends three things to help navigate a shaky farmland market: Maintain a buying position. “As people get panicky, they may be willing to take a lower price or offer lower than the general public really would anticipate. It’s an emotional decision,” he says. Continue making cash grain sales. Doing so will help you keep a consistent income streaming in, regardless of where the land market is going and how those sales may affect your ability to secure more land. “How could you ever look a gift horse in the mouth? We can sell new-crop soybeans for over $13/bushel cash. Those are phenomenal prices. Yes, we’re going to get kicked in the shorts with our soybean yield, but you still have to sell the stuff,” Hertz adds. “You’ve still got to make a decision.” Look again at land rents. “If you had not increased along with where it should’ve been, you probably should’ve gotten an increase. If you were pretty good but not at top of the market, rent will probably be pretty good next year. If you were at the high for cash rent last year, probably adjust downward,” Hertz says. Continue reading
