What are the risks associated with farmland investment

Owning direct farmland can bring about a great deal of financial and non-financial satisfaction. Farmland investment returns have outperformed the S&P 500 over the last ten years, so investors should be interested in this asset class.

 

A farm that is inherited by future generations can also strengthen family ties and provide the owner with an invaluable sentimental heirloom. Due to its susceptibility to the climate, water supply, and macroeconomic factors, farmland investment is not without investment risk, even though it has historically shown stability and even gain during economic downturns.

 

As a result, investors need to understand the risks connected to farmland as a class of asset. Fortunately, you may protect your farmland investment by reducing associated investment risk through effective management and creative techniques.

Farmland Investment in Turkey has low risk

Fortunately, engaging with farmland investment businesses such as with MKN Group may help you lower the risk associated with your investments.

 

Investing in Turkey through our farm properties serves as a means of stabilizing your portfolio and maybe creating wealth over the long term because of its exceptional historical performance relative to other asset classes and limited correlation to economic downturns.

 

In addition, this represents one of Turkey’s top economic possibilities for foreigners. If you invest in Turkey, you can obtain Turkish residence or a Turkish passport, which is great if you’re considering relocating there from the UK or another foreign country. Would you like additional information about Turkish agricultural land for sale?

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Idea Investment Company Construction Trade and Industry Ltd. Sti.

 

Compared to other real assets, farm properties are physical assets that are less likely to depreciate over time. The majority of the time, farmland only needs to be maintained properly when it is being farmed, but buildings such as homes, offices, and industries need constant maintenance in order to retain their value.

On the other hand, when agriculture is responsibly carried out, the soil gets better and the value increases.

 

Increasing Demand

Let’s start with a major one: during the next 30 years, crop production will need to quadruple due to the growth in human population and rising per capita demand.

 

Minimal Volatility

The risk associated with any investment is greatly increased by volatility. Because a factory’s revenues are dependent on the whims of its clients and the state of the economy, investors learn to live with a perpetual worry of the end of any given boom cycle. Nonetheless, compared to other businesses, agriculture investment undergoes fewer booms and busts. In the last thirty years, the stock market has experienced nearly 17% annual volatility, but agriculture has had only 6.75 percent of that same volatility.

 

Low Correlation

Because the need for food is not affected by these economic cycles, there is no correlation between farms and other types of real estate. By diversifying its agricultural investments, a sustainable, diversified farm may also bolster itself.

 

Historical Performance

When compared to other investment options, traditional real estate, bonds, and gold have persistently underperformed investments in farmland. It also has significantly greater stability than the stock market. In terms of volatility, agricultural real estate has historically offered robust, consistent returns that are uncorrelated with those of stocks, bonds, and even other real estate.

Farmland Investment Risks In General

Investing in farm assets involves considerable risk. Like any investment, there is a chance that some will perform poorly or yield losses. These are the main risks associated with investing in farming.

 

Farmland is a heavy asset that is hard to split apart. As a result, farmland may not be easily sold by the owner. When you want to or need to recover your initial investment, agricultural land for sale may move slowly if you have insufficient liquidity.

 

Moreover, farms operate on a seasonal schedule and are utilized extensively throughout the year, which may restrict the window of opportunity for sales. Farmland markets and its investments move more slowly than stock markets, where shares can be bought or sold with the push of a button. Buying agricultural assets therefore needs to be viewed as a long-term investment.

 

Being a farmer is like being an owner of a weather-dependent business. For example, crops may not be able to be produced and harvested due to flooding caused by severe precipitation. On the other hand, inadequate rainfall may cause a drought, which would likewise make crop production and harvesting difficult. Furthermore, yield and investment success may be impacted by a number of other naturally occurring occurrences, such as diseases that affect agriculture and issues related to climate change.

 

Commodity prices are notorious for their volatility, which can be attributed to a number of factors such as weather patterns and geopolitical developments. Consequently, another risk associated with farmland investment is falling commodity prices, which can affect the outlook for the market for products raised on farms.

 

While buying farm assets carries a lesser risk than many other asset classes due to the favorable risk-reward characteristics of farmland investment, some hazards are inherent to investing in general.

Feel free to contact us for the feasibility study of walnut farmlands in Turkey