Tue, Aug 30, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Climate change and land depletion driving returns from farms

Monday, December 09, 2013
Opalesque Industry Update - Climate change and depletion of agricultural land are the most important factors driving investment returns from farmland, according to new research by Aquila Capital (“Aquila”), one of Europe’s leading independent alternative asset managers.

In the survey, both climate change and depletion of agricultural land leading to scarcity of supply were ranked equal first in terms of driving positive returns from farmland. In third and fourth place respondents ranked demand for food from increasingly wealthy people and from the global population respectively.

Detlef Schoen, Group Head of Farm Investments at Aquila Capital, commented: “There are powerful macro trends supporting farmland as an investment: every day, 30,000 hectares of farmland are lost as a net 200,000 is added to the world’s population.”

When asked to identify future farmland investment opportunities 70% of investors cited backing companies that provide farm supplies while half (50%) believed that owning and developing farms will provide strong returns. The same percentage (50%) felt that opportunities lie in investing in infrastructure firms building transport links to farms.

Investing in farmland is still a nascent asset class, representing an average of only 1.3% of investor portfolios: however 23% say they are looking to raise their exposure to farmland over the next one to two years and only 2.3% plan to reduce it. When asked how more capital can be attracted to the asset class, 70% of investors believed the investment industry needs to develop more effective ways to invest in farmland. Half (50%) also say institutions’ own lack of understanding of the farming sector is stopping them from investing more in farmland.

However, several large institutions now invest in farms, including sovereign wealth funds such as Temasek and the China Investment Corporation.

Detlef Schoen added “Going forwards, we believe the best opportunities lie in using a conservative, yield-driven strategy, pinpointing the best farmers and working with them to align their interests with those of investors to maximize success.”

Aquila Capital’s specialist investment fund, which focuses on milk farms in Australia, is currently projecting pre-tax cash returns of 4-6% per annum as part of a double digit overall internal rate of return.

Press release

bc

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Commodities - Hedge funds pile into bullish bets on U.S. crude by most on record, Rig count steady, hedge funds dump short contracts on 63 million barrels, Hedge funds bail on Copper as Goldman predicts ‘supply storm’, Hedge funds pile up bets against sterling[more]

    Hedge funds pile into bullish bets on U.S. crude by most on record From BRecorder.com: Hedge funds and other speculators raised their bullish bets on US crude oil in the past week by the most on record fuelled by speculation that Organization of the Petroleum Exporting Countries will agr

  2. Investing - U.S. hedge fund Marathon makes Brexit bet on European property, Hedge funds love Liberty and John Malone, DE Shaw could bid for control over TerraForm Power, New York hedge fund increases stake in Tronc as sale talks continue, Don't wait too long to check this +20% value fund's ideas[more]

    U.S. hedge fund Marathon makes Brexit bet on European property From FT.com: Marathon, a $13bn US hedge fund, is building a big Brexit trade, increasing its investments in property across Ireland, France, Germany and the Netherlands, in a bet that they will be among the big beneficiaries

  3. The Big Picture: Water is single largest environmental investment opportunity[more]

    Benedicte Gravrand, Opalesque Geneva: Water, the world’s most precious and undervalued commodity, is set to lead the socially and environmentally responsible investment themes. This is according to specialist fund manager Thomas Schumann. His firm,

  4. Opalesque Exclusive: Investors struggle to identify the better performing hedge funds[more]

    Komfie Manalo, Opalesque Asia: Fund managers and investors believe that performance is one of the major factors driving change in the hedge fund industry, a Preqin survey showed in its latest Hedge Fund Spotlight. Preqin said that the disappoin

  5. …And Finally - Baby born on Cebu Pacific airplane gets 1 million air miles[more]

    From CNN.com: Here's one kid who'll probably learn to fly before she can crawl. After being born four hours into a flight from Dubai to Manila, baby girl Haven has been gifted 1 million air mile points. Haven's mom went into labor more than five weeks early while flying on an aircraft op