As a private investor, you’ll know that it’s almost impossible to guarantee a return, no matter how alluring the investment looks. It’s always important to assess the risk you may be taking with your money before you commit to investing it.
Land investment is no different from any other savings vehicle. Many people have seen excellent returns on their investment, and land prices in key areas continue to increase; particularly where the need for housing is greatest and land for development is at a premium.
So, can you make money from land? Here’s why land could be a good investment for you:
Housing shortage – in the UK, there is still a housing shortage with, on average, only half the new homes needed being built each year. As demand continues to exceed supply in this area, developers will seek new sites and the planning authorities may grant permission on a wider range of sites in order to re-balance the housing scales. This creates a great opportunity for those who wish to invest in land.
Property prices – of the new homes being built, fewer of them are falling into the “affordable” price bracket. This means that developers are realising higher profits for their projects and can afford to make higher bids for land for future development.
Lifestyle – although rural and suburban land will also rise in value, there is still money to be made in central land locations. Where urban land can be regenerated, it is often turned into multi-function developments; apartments with shopping, eating and recreational activities all within the same site. There is a huge appeal to this type of lifestyle and these developments are still profitable.
Economy – land doesn’t have to be earmarked for residential development in order to make a profit. Out-of-town shopping centres, business parks and leisure complexes are still big business and whilst spending is high and these developments increase job opportunities in the area, they are also likely to make money for the landowners.
As always, profits can’t be guaranteed. If you buy land that’s denied planning permission, you’re unlikely to make the returns that are possible when planning is approved, and that’s a risk you must assess before you commit your money.