Wednesday, October 21, 2015

Land: U.S. Orchards Again Outperform Cropland For Investment Returns

From Agrimoney:
Orchard land proved to be the best bet in US land investing once again. 
The National Council of Real Estate Investment Fiduciaries (Ncreif) farmland index showed US orchard land delivered higher crop returns and price appreciation than arable land over the three months to September 30. 
And the strong orchard land returns helped deliver overall returns on investment of more than twice the previous three months. 
Returns rise
The Ncreif farmland index tracks the returns and prices of 642 investment‐grade farm properties. 
The index showed that total returns for farmland investments ran at 2.45% over the period, comprised of 0.96% land price appreciation and 1.49% income return from crop sales.
This is up from 1.45% this time last year, and 1.16% in the previous three month period.
Although Ncreiff said the expansion in farmland prices "has matured", total annual farmland returns ran at 12.74% over the last year, comprising an income return of 8.08% with a price appreciation of 4.42%. 
Orchards win out
But the figures disguise a sharp divergence in fortunes.
Permanent cropland, which is land planted with trees or other perennial plants, yielded higher returns than annual cropland, which is replanted each year. 
Permanent cropland yielded 3.26% over the period, compared to 1.80% from annual cropland, thanks to higher crop income....MORE