A Hot Alternative Investment: Farmland

Having trouble finding yields in your usual investments? Maybe you should try farmland. JLL VP Andrew Fischer tells us areas of the Corn Belt have historically been overlooked and undervalued. The Corn Belt has seen 17% to 20% appreciation over the last two years and produced a return of 10% from 1970 to 09. Compare that to stocks and bonds, which returned 6.25% and 7.3% in that time period, respectively. (And stocks and bonds don't include delicious vegetables with their returns.) To further evaluate a potential investment, Andrew developed criteria to value farmland based on factors like soil productivity.

Andrew says the sector may improve further as global demand for food increases. One big driver is the growth of China and other emerging markets. As countries emerge from third-world status, the first thing they do is eat better. That often includes purchasing food, which is good news for American farmland: The US handles 45% of the worlds corn exports. China is transitioning from being an exporter to an importer of corn, and the USDA projects the country will account for 40% of the projected overall growth in global corn imports over the next ten years.

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