# Investing in Agricultural Land with road frontage



## quickinvestor (22 Jun 2017)

Top Quality Agricultural Land that comes with Road Frontage in Laois 


The land is divided into 5 plots making a total of 50 acres. All  5 plots have road frontage and are in in fields beside one another. 


The land is between two towns. Lots of farmers are around. 


I Would hope to rent the rent the land for 15-20 years and then sell.


6300 per acre to buy, can rent for 180 per acre 


No hassle as I would have no maintains to do


I won't need the money for the next 20 years


Does anyone see the price of land rising in Ireland over the next 20 years?


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## major (22 Jun 2017)

Top quality land should be making  double that and with road frontage for easy access is   highly desirable,forestry /lesser quality  land would be making up to 5000 euro  a acre,as to the future ,who knows, but top quality land  always a top notch investment and tends to  be always in demand...


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## Steven Barrett (22 Jun 2017)

quickinvestor said:


> Does anyone see the price of land rising in Ireland over the next 20 years?



The price of land is increasing, it just depends on where the land is...


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## galway_blow_in (22 Jun 2017)

quickinvestor said:


> Top Quality Agricultural Land that comes with Road Frontage in Laois
> 
> 
> The land is divided into 5 plots making a total of 50 acres. All  5 plots have road frontage and are in in fields beside one another.
> ...



i think one of the features of the property market in the next two decades will be the continuing fall in the price of farm land , no other sector of the property market got out of hand to the degree the land market did during the bubble but despite this , since 2012 when dublin residential  bottomed , land has not risen in value , it has actually fallen since 2012 and is now on a completely different trojectory to the rest of the property market  , while houses in dublin became very expensive until 2007 , farm land went from an average of about three thousand pound per acre in 1997 to twenty thousand euro an acre in 2007 , today the average price of farm land is around 7 k per acre but is cheaper than that in much of the country , yet even one buys thirty acres for say 200 k , thirty acres is worth at best 200 euro per acre to rent to a farmer , thats 6 k per annum on a spend of 200k , thats 3% , in a deeply illiquid asset , that is a truly terrible return on money 

remember , unlike housing in urban areas , there is no shortage of farm land , much of it is under utilised by unviable beef farmers who farm subsidies from europe for the most part , the price of farm land in the likes of connacht is completely reliant on the continuation of the subsidy regime in place , it is foolish to take these handouts for granted , especially with brexit , eventually urban dwellers across europe will demand to know why so much of their taxes goes towards supporting a farmer in mayo with twenty cattle who gets a cheque in the post of twenty thousand euro per acre from brussells

any asset reliant on wellfare of some kind is not especially secure


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## galway_blow_in (22 Jun 2017)

SBarrett said:


> The price of land is increasing, it just depends on where the land is...



no its not , its falling


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## Steven Barrett (22 Jun 2017)

RTE did alright...


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## major (22 Jun 2017)

galway_blow_in said:


> no its not , its falling


Everything goes in circles ,who  would have thought that houses would once again   be up in price dramatically  following the property  crash


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## galway_blow_in (22 Jun 2017)

major said:


> Everything goes in circles ,who  would have thought that houses would once again   be up in price dramatically  following the property  crash



apples and oranges

1. housing has recovered in economically vibrant urban locations ( not in economically depressed locations )

2 . demand exceeds supply when it comes to housing in these areas

there is tonnes of farm land out there and the majority of farmers rely on subsidies for their income which effectively means the price of farm land is largely determined by handouts from europe

despite the fact that land is down about 60% from the peak in price , it is still more expensive in this country than in the majority of european countries


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## major (23 Jun 2017)

galway_blow_in said:


> apples and oranges
> 
> 1. housing has recovered in economically vibrant urban locations ( not in economically depressed locations )
> 
> ...


All European countries farmers get the same subsidies that Irish farmers get so don't think that influences the price difference but if you had top quality land available for sale or rent in areas of high dairy output or horticulture then your land will command top price paid so as above it location,location.....


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## galway_blow_in (23 Jun 2017)

major said:


> All European countries farmers get the same subsidies that Irish farmers get so don't think that influences the price difference but if you had top quality land available for sale or rent in areas of high dairy output or horticulture then your land will command top price paid so as above it location,location.....



would you accept that a reduction in subsidies would effect the price of land ?

at least in areas where dairying is not particularly intensive or widespread

btw , farmers in poland and hungary etc receive less subsidies than irish farmers , their is likely to be a rebalancing going forward , more recent EU members will want what they see as their fair share

cake will obviously shrink with regard brexit too so its not looking like irish farmers will receive the same in the future as they do now

i just want to be clear , im not saying farming is facing a bleak future , im saying farm land will go down in price , high land prices are an obstacle to an expanding ( efficient ) agri sector


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## major (23 Jun 2017)

galway_blow_in said:


> would you accept that a reduction in subsidies would effect the price of land ?
> 
> at least in areas where dairying is not particularly intensive or widespread
> 
> ...


In areas of top quality land in all parts of Ireland ,the farmers are usually well established anyway even before the subsidies so that situation wont change with subsidies dwindling,its the poorer type land/holding that land needs more maintenance which costs money  that will lose land value going forward no doubt but should still have a floor price of around 5000 euro /acre,also most of the farmland is passed on this next generation as gifts so usually no debt following this land so land tends to stay within the same family


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## galway_blow_in (23 Jun 2017)

major said:


> In areas of top quality land in all parts of Ireland ,the farmers are usually well established anyway even before the subsidies so that situation wont change with subsidies dwindling,its the poorer type land/holding that land needs more maintenance which costs money  that will lose land value going forward no doubt but should still have a floor price of around 5000 euro /acre,also most of the farmland is passed on this next generation as gifts so usually no debt following this land so land tends to stay within the same family



a change in the hand out culture from europe would re price land across the country , unlikely that an area would be immune just because it has a good few dairy farmers

in the bubble years , land was expensive everywhere despite their being no dairying in those regions to any significant degree , there is no inherent reason why farm land should be expensive , there is tonnes of it

there is an ongoing repricing of farm land , the bubble years distorted things to an incredible degree


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## RedOnion (23 Jun 2017)

OP, land values really depend on location. I'm familiar with a small plot of land achieving over 20k per acre in the south east from a strawberry grower.
However, I believe land is one of those assets that would drop a lot in value if interest rates were to rise, and they'd become very illiquid. Unless I was interested in owning land long term, potentially building on it in future, or was purely interested in the speculation I wouldn't be investing in it. 
There's no way you'd buy good quality land in Laois for the price you're suggesting. Your rental yield would be a little over 1%, so you're hoping for strong capital appreciation. 
If your real investment purpose is to avoid inflation, agri land is a very specific asset class to be putting your money in.
From this and your other posts, given your long investment timeframe, I'd be making sure to get tax advice on how to structure your investments.


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## Jim Stafford (23 Jun 2017)

It is rare to receive so much advance notice (2 years) of an economic impact, Brexit, that is going to adversely affect the agri sector.

Whilst Brexit is just on one of many parameters to consider, it is probably the biggest parameter to consider. 

The impact on the Irish farmer will be bad enough with potentially losing their main market in the UK, without losing the Irish consumer to the Northern Irealnd market as well. We could see Irish farmers calling for a "Hard _Border_" with Northern Ireland when they see Irish shoppers crossing the border to buy Argentinian beef, New Zealand lamb and Brazilian chickens! 

You might find that Agri land will be cheaper to buy in 3/4 years time.

Jim Stafford


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## quickinvestor (23 Jun 2017)

Some great replies here. Yes, the land is a good price, but I always wonder why local farmers don't buy, perhaps they can rent cheaper and claim?

Some of you have noticed I am a long term investor,  I am in no rush to make *bad *illiquid investment. 

Jim Stafford, I think I will wait for another 3/4 years until the next recession?


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## galway_blow_in (24 Jun 2017)

quickinvestor said:


> Some great replies here. Yes, the land is a good price, but I always wonder why local farmers don't buy, perhaps they can rent cheaper and claim?
> 
> Some of you have noticed I am a long term investor,  I am in no rush to make *bad *illiquid investment.
> 
> Jim Stafford, I think I will wait for another 3/4 years until the next recession?



its important to realise that agriculture often operates in its own economy , from around 2003 to 2009 , agriculture was doing quite poorly , farm land was a crazy price but this was due to people who sold land for development beside towns reinvesting the money in farm land out in the country , from 2010 to around 2014 , dairy farming had a boom , from early 2015 to the end of 2016 , it was in a recession with prices down 50% from the middle of 2014 , the price of an acre halved in value from the peak bubble of early 2007 to early 2010 , land actually then went back up about 25% but since 2014 has gone down about 25% again

in effect , this sector of the property market has completely decoupled from the broader property market so a recession in the broader economy need not coincide with one in agriculture

why are you so wed to buying farm land can i ask ?

you say your a long term investor , 3% isnt much to ask for and over the long term , an equity portfolio will outperform land by a distance


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## joe sod (24 Jun 2017)

Good points galway-blow-in. There is a big emotional attachment to land in ireland so less of it comes up for sale than is rational. I agree with all the points about brexit and the dependance on subsidies from europe. I think people like it because it is simpler than property and people got burnt by bank shares 10 years ago. I think farming has had its boom already and now I think to make money you need to be investing in general property or European equities which have been moribund for years. I think Irish farmland is now in the category "too difficult" there are too many unknowns now, but European equities or General property is much more predictable


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## quickinvestor (24 Jun 2017)

galway_blow_in said:


> its important to realise that agriculture often operates in its own economy , from around 2003 to 2009 , agriculture was doing quite poorly , farm land was a crazy price but this was due to people who sold land for development beside towns reinvesting the money in farm land out in the country , from 2010 to around 2014 , dairy farming had a boom , from early 2015 to the end of 2016 , it was in a recession with prices down 50% from the middle of 2014 , the price of an acre halved in value from the peak bubble of early 2007 to early 2010 , land actually then went back up about 25% but since 2014 has gone down about 25% again
> 
> in effect , this sector of the property market has completely decoupled from the broader property market so a recession in the broader economy need not coincide with one in agriculture
> 
> ...




I would be buying it as a safe investment to protect against inflation. However; I already own land C.10  divided into 3 fields beside each other in another county. They currently provide ROI of 1800 per year inflation tracking linked contracts. No debt on land. Owned for last 80 years.

Perhaps, I have enough of land in my Portfolio ?


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## galway_blow_in (25 Jun 2017)

quickinvestor said:


> I would be buying it as a safe investment to protect against inflation. However; I already own land C.10  divided into 3 fields beside each other in another county. They currently provide ROI of 1800 per year inflation tracking linked contracts. No debt on land. Owned for last 80 years.
> 
> Perhaps, I have enough of land in my Portfolio ?



everything is a decent buy at the right price , i just think 3% is a poor return in an illiquid asset , there are countless funds which pay 3% and the capital appreciation  should easily beat farm land


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## major (25 Jun 2017)

Farmland is very attractive  to avail of  tax free incentives  and reliefs when selling or passing it on, so its not all bad...


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