There are lots of different options for directly or indirectly investing in agriculture, forestry and forest products value-added chain:
For indirect options, such as standard bonds, shares or investment funds, the normal risks of holding these types of assets – which do not necessarily have anything to do with agricultural land and timberland as an asset class – apply. Even if a sector is booming, funds can still be poorly managed and fold, or a company can become embroiled in a crisis triggered by internal or external circumstances. For the investor, this could result in the loss of 100% of their investment.
Direct investment – acquisition of title to agricultural land or timberland recorded in the land registry – is the only option where there is no risk of losing all of your investment. This is because the majority of the value of the investment is in the soil, and not the rape, wheat, wood, etc. which grows on it. Even in the unlikely event of a complete destruction of the harvest, through factors such as drought or complete destruction of the woodland by fire, the major component of the investment – the renewing power of the soil – remains unaffected.
In addition, the ‘savings bank’ aspect of direct investment in sustainable land use only works if you as an investor can make and implement decisions at the right time point. As an indirect investor, you are dependent on the interests of third parties.
Reason enough, not just for families and trusts such as Fugger, Esterházy, Liechtenstein, the house of Bismarck and Thurn & Taxis over the last few centuries, or Harvard University, IKEA, Tetra Pak, Benneton, wealth managers at Munich Re and ERGO Group and the Porsche family over the last few decades, to invest directly in agricultural land and woodland.
SilvaVest GmbH provides its clients with individual, exclusive advice and support on the road to owning their own agricultural or timberland real estate – from identifying investment criteria, through finding the right buying opportunity in the right region, through due diligence and the purchase process, to developing a management plan after the purchase. By successfully completing investments in a total of over 200,000 hectares of land over the last few years, we have established ourselves as a dependable partner for major private and institutional landowners, particularly in North America. This enables us to acquire agricultural land and woodland for our clients before it comes onto the market.
Genuine after-sales service: For overseas investments in particular, the immediate issue is generally how to profitably manage the land or protect woodland after purchasing. But even privately-owned timberland can be managed just as easily as an office building if you choose the right location. In countries like the US, Canada and Scandinavia, just as there are property managers for investors investing in real-estate, there are also forestry management services which take complete responsibility for managing timber harvests, forest road construction and leasing of hunting rights, as well as tax declarations in the host country. If required, we will be happy to select the right property manager for our clients from our extensive network of contacts, and to monitor budgets and management of the land.
Currently, together with our local partners, we are successfully and sustainably managing more than 200,000 hectares of agricultural land and woodland on behalf of our clients. Whilst the DAX fell 18% in 2018, over the same period all of our clients were able to enjoy reasonable cash revenues and competitive increases in the value of the material asset (returns). 2018 also illustrates the point that agricultural land and woodland correlate weakly or not at all with other asset classes.
So, give us a call – we will be pleased to help!