....spent in Ursula Heinens very cool, very secluded and upmarket Posada de Campo "Balcon del Abra" close to Mariscala, Lavalleja. Extremely cultivated and in the midth of the uruguayan countryside. I recommend.
Diego Velazquez' Mercury and Argus
Monday, 5 November 2012
Wednesday, 11 July 2012
Your girl might like it, too
make a sound investment and save the planet ?
ok, excuse the sensationalist title, I refer to the following, which is, of course, more relative :
In the northern Paraguay Chaco region undeveloped, clear title properties, consisting entirely of natural impenetrable forest, cost roughly US$300/hectare. The good ones do, prices can go below US$100/hectare, when soils are poor and rainfall low, but those are not buys I can recommend.
(properties are usually no smaller then 4000 hectare, so in absolute terms those are million dollar investments)
These lands are different from what might come to your mind, like the tropical rainforests of the amazon, or similar.
They usually consist of very deep sedimentary soils, rather rich in nutrients, and receive less (though not too little) rainfall then the rainforests further north. Forests of this climate belt (transition semi arid to semi humid tropics) are of lesser height and drop their leaves during dry season.
Unlike the land the amazon rainforest grows on, those soils make good farmland, not just for cattle grazing, but real farmland to grow grains etc.
It is so cheap because it is so remote. Paraguay is a low development country and road network in the Chaco is very poor. That makes it arduous to develop those properties now before roads improve, which they do.
But the point might be, humanity might be better served not to cut those forests but leave them and let them do their job of storing carbon, wildlife, evaporating moisture etc, or, say, leave 80% and convert only the rest into farmland.
So, where is the return for a land buyer refraining from deforestation, apart from being a good guy -
Now it gets hypothetical.
If you own an asset and can either do something that generates personal income or do something that benefits society and essentially so, in many cases (not all, admittedly) sooner or later there will be a mechanism that reembourses you to do the beneficial thing, a mechanism that possibly develops out of the existing global carbon offset trade, the UN-REDD (http://en.wikipedia.org/wiki/Reducing_Emissions_from_Deforestation_and_Forest_Degradation) points in that direction.
So far for being a good guy, now for cold-hearten asset allocation.
Lands with soil/topography/climate characteristics similar to the above mentioned at US$300/hectare cost US$9000 in some first world countries where location, infrastructure and legal/institutional framework is first rate, like Australia.
Now, 1:30 is quite a valuation gap if there ever was any.
That means there is a huge margin for appreciation. And it means, if once carbon credit type of rents set in, related to that moment's property value, your return on purchase price value could be very nice.
Like that it may develop.
Or - it simply gets prohibited to cut any forest, no compensations paid, then your asset value drops severely.
Or - they prohibit, after you bought, the sale of large tracts of land to foreigners, that would harm the market value of your land somewhat, though not its intrinsic value.
Or - you once get governed by a business unfriendly, Hugo Chavez type of government, who harasses land owners in a hundred different ways, raising property taxes, invent stupid regulations, whatever.
Judge by yourself, if you like the chance-risk-profile.
I like it.
I buy land over there with my own money.
In the northern Paraguay Chaco region undeveloped, clear title properties, consisting entirely of natural impenetrable forest, cost roughly US$300/hectare. The good ones do, prices can go below US$100/hectare, when soils are poor and rainfall low, but those are not buys I can recommend.
(properties are usually no smaller then 4000 hectare, so in absolute terms those are million dollar investments)
These lands are different from what might come to your mind, like the tropical rainforests of the amazon, or similar.
They usually consist of very deep sedimentary soils, rather rich in nutrients, and receive less (though not too little) rainfall then the rainforests further north. Forests of this climate belt (transition semi arid to semi humid tropics) are of lesser height and drop their leaves during dry season.
Unlike the land the amazon rainforest grows on, those soils make good farmland, not just for cattle grazing, but real farmland to grow grains etc.
It is so cheap because it is so remote. Paraguay is a low development country and road network in the Chaco is very poor. That makes it arduous to develop those properties now before roads improve, which they do.
But the point might be, humanity might be better served not to cut those forests but leave them and let them do their job of storing carbon, wildlife, evaporating moisture etc, or, say, leave 80% and convert only the rest into farmland.
So, where is the return for a land buyer refraining from deforestation, apart from being a good guy -
Now it gets hypothetical.
If you own an asset and can either do something that generates personal income or do something that benefits society and essentially so, in many cases (not all, admittedly) sooner or later there will be a mechanism that reembourses you to do the beneficial thing, a mechanism that possibly develops out of the existing global carbon offset trade, the UN-REDD (http://en.wikipedia.org/wiki/Reducing_Emissions_from_Deforestation_and_Forest_Degradation) points in that direction.
So far for being a good guy, now for cold-hearten asset allocation.
Lands with soil/topography/climate characteristics similar to the above mentioned at US$300/hectare cost US$9000 in some first world countries where location, infrastructure and legal/institutional framework is first rate, like Australia.
Now, 1:30 is quite a valuation gap if there ever was any.
That means there is a huge margin for appreciation. And it means, if once carbon credit type of rents set in, related to that moment's property value, your return on purchase price value could be very nice.
Like that it may develop.
Or - it simply gets prohibited to cut any forest, no compensations paid, then your asset value drops severely.
Or - they prohibit, after you bought, the sale of large tracts of land to foreigners, that would harm the market value of your land somewhat, though not its intrinsic value.
Or - you once get governed by a business unfriendly, Hugo Chavez type of government, who harasses land owners in a hundred different ways, raising property taxes, invent stupid regulations, whatever.
Judge by yourself, if you like the chance-risk-profile.
I like it.
I buy land over there with my own money.
Thursday, 5 July 2012
A Grand Rural Estate
If you are 51 like me, you might have fantasies, too, about the family fortune (big or small) lasting over generations or better centuries. My thoughts inevitably turn to the old (noble) families (I am western European, German) with their grand rural estates. For me there is no other asset class that stands that much for continuity over centuries, for defining a family, for anchoring a family.
And we perceive it as cool. Just look at the various clothing labels, how they play with the landed gentry lifestyle, to sell us their coats and jackets, from Barbour to Ralph Lauren to I don't know what.
Now what is interesting, farmland is quite a rational asset class. It is a play of palpable asset vs paper asset, a play of limited supply (global fertile land) to rising demand (of food).
If you have 3 or 4 million US$ to spare, think of it.
Starting from US$3m in South America, US$5m in North America or Eastern Europe, there are some properties in the market that would be both a reasonable farm investment and a cool rural lifestyle investment.
Only downside being that farmland prices rose quite a bit globally over the last couple of years.
And we perceive it as cool. Just look at the various clothing labels, how they play with the landed gentry lifestyle, to sell us their coats and jackets, from Barbour to Ralph Lauren to I don't know what.
Now what is interesting, farmland is quite a rational asset class. It is a play of palpable asset vs paper asset, a play of limited supply (global fertile land) to rising demand (of food).
If you have 3 or 4 million US$ to spare, think of it.
Starting from US$3m in South America, US$5m in North America or Eastern Europe, there are some properties in the market that would be both a reasonable farm investment and a cool rural lifestyle investment.
Only downside being that farmland prices rose quite a bit globally over the last couple of years.
 | |||
| historic Estancia in Uruguay |
 |
| you got them in the US, too, where not gone with the wind |
Thursday, 28 June 2012
institutional investors - the next wave
A Reuters article on a June 27th London agricultural investment summit describes US and European investment funds' increasing interest in farmland investments, with investment volume said to double from 2011 to 2015. TIAA-CREF alone, a US pension fund, is said to have formed with partners a month ago a $2billion fund for farmland purchases all over the world
Tuesday, 15 May 2012
gold vs farmland
While gold is not an asset which supply can be inflated by a central
bank, the world’s gold stock increases all the time by roughly 1,5%
annually, so it is a relative but not an absolute protection against
inflation. Certainly not the way fertile land is.
Further more, my understanding is that the value of an asset is ultimately based on how it serves you. A house houses you, farmland feeds you, a company share entitles you to participate in that company’s earnings (if they materialise), an automobile allows you to get around.
Gold serves to fill your bad tooth, be converted into nice jewelery, plus some odd industrial uses, and that is, acording to wikipedia, where 60% of the gold production goes. And it remains to be seen if that percentage does’t decrease with gold costing above US$1600.
So, 40% are bought by individuals and institutions that will not get anything out of it, sticking to that narrower sense of an asset serving in some way.
In comes the argument that it is a storage of value. And obviously as a storage of value it is aquired by the latter 40%. Fair enough. But that value is nothing but consensus, as is the case with paper money. There is no underlying uncontestable value, like the uncontestable value of your house being able to house you.
Surely, there are asset classes where it would be more stupid to be invested in today, like bonds or bank deposits, but don’t underestimate that gold is of no use in a stricter sense. And as is the case with all useless things, you can not rent it out to somebody who wants to use it and get some rent for it, as would by the case for a house, a car, farmland or, last not least, money.
If you really look for intrinsic value, consider farmland, not that you will be the first to do so, prices rose substantially everywhere, but there is no other asset as limited and irreplaceable.
I earn my money selling that
Further more, my understanding is that the value of an asset is ultimately based on how it serves you. A house houses you, farmland feeds you, a company share entitles you to participate in that company’s earnings (if they materialise), an automobile allows you to get around.
Gold serves to fill your bad tooth, be converted into nice jewelery, plus some odd industrial uses, and that is, acording to wikipedia, where 60% of the gold production goes. And it remains to be seen if that percentage does’t decrease with gold costing above US$1600.
So, 40% are bought by individuals and institutions that will not get anything out of it, sticking to that narrower sense of an asset serving in some way.
In comes the argument that it is a storage of value. And obviously as a storage of value it is aquired by the latter 40%. Fair enough. But that value is nothing but consensus, as is the case with paper money. There is no underlying uncontestable value, like the uncontestable value of your house being able to house you.
Surely, there are asset classes where it would be more stupid to be invested in today, like bonds or bank deposits, but don’t underestimate that gold is of no use in a stricter sense. And as is the case with all useless things, you can not rent it out to somebody who wants to use it and get some rent for it, as would by the case for a house, a car, farmland or, last not least, money.
If you really look for intrinsic value, consider farmland, not that you will be the first to do so, prices rose substantially everywhere, but there is no other asset as limited and irreplaceable.
I earn my money selling that
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