The grass is greener
The rolling fields of England beckon mainlanders with the promise they will reap big rewards, Andrea Li reports
Wealthy mainland Chinese investors who have made their money in the prime Central London market are now diversifying their portfolios to include properties and land in rural England.
Brokers have reported a surge in the number of mainland Chinese inquiries for commercial farmland and country estates. Farmland has attracted the most interest, with investors recognising it as a marketable income-producing asset at a time when other forms of investment such as the stock market remain volatile.
'Capital growth on farmland in the UK has outperformed every other asset class except gold in the past 10 years,' says Clive Hopkins, head of farm and estate at Knight Frank. The price of farmland in the UK has almost trebled over the past decade, with most of the growth coming in the past five years. Hopkins said land yields now were 3.5 to 4 per cent.
Bare agricultural land is worth about GBP6,000 (HK$74,000) an acre, about three times as much as 10 years ago, according to the Knight Frank Farmland Index, which tracks the average price of bare commercial agricultural land (with no houses or other buildings) in England.
There are many advantages to owning farmland, according to brokers, but the biggest attraction by far is the potential of the agriculture industry.
As the world's population is predicted to top 9.1 billion by 2050, one third more than today, food production will need to rise dramatically to meet demand. In particular, annual cereal output is expected to rise to about 3 billion tonnes from the current 2.1 billion, and annual meat production to rise by more than 200 million tonnes to 470 million tonnes.
For many, there is no better place in Europe to invest in farmland than the UK, which possesses one of the best climates to grow wheat and other soft commodities. Its proximity to ports also promises an accessible export market, while transparency and rule of law guarantee clear title deeds and protection of land ownership, says Ian Hepburn, a partner at the independent buyers agency Private Property Search.