Forget gold. The ultimate defensive investment strategy in the UK appears to be farmland.
Consider the following chart, included in a press release from property consultants Knight Frank, which compares the performance of UK farmland with that of the FTSE. Pay close attention to relative performance during the third quarter of 2009:
As the property consultants noted in the release:
“Although commodity prices have fallen back significantly from last year’s record highs, there seems to be a feeling that agriculture in the UK has a long-term future and farmers, who make up 57% of buyers, are keen to buy more land. We are also seeing tentative signs of a return of the lifestyle buyer (25% of purchasers) as the housing market starts to pick up again.
Meanwhile, not only will buying farmland offer investors some degree of “commodity hedging”, those inclined towards tax-efficiency will be the first to tell you the asset class offers other desirable qualities like inheritance tax benefits and capital gains.
Related links:
Fitch: False dawn for the UK housing market – FT Alphaville
UK property, building castles in the sand – FT Alphaville
The sting in Nationwide’s house price survey – FT Alphaville
In the UK, money may well grow on trees – FT Alphaville