For centuries, gold has been revered as the ultimate safe-haven asset, a symbol of wealth and stability. However, as the investment landscape evolves, a new contender has emerged that not only rivals gold’s stability but also outperforms its returns over the long term: farmland. If you’re considering the Portugal Golden Visa program and are in search of an investment option that aligns with your financial goals while also benefiting the climate and society, this article is for you.
The Case for Farmland
Farmland has consistently generated higher returns than gold over the past three decades, making it one of the most compelling investment opportunities available today. According to The Motley Fool, farmland has outperformed all other asset classes except the Dow Jones REIT Index over the last 30 years. For Golden Visa investors who prioritize capital preservation, this is particularly intriguing. Unlike real estate, which is susceptible to market fluctuations and policy changes, farmland is driven by fundamental supply-and-demand factors, ensuring steady appreciation in value over time.
Farmland vs. Gold: A Proven Track Record
Data from the U.S. Department of Agriculture (USDA) reveals that farmland has delivered an average annual return of approximately 11.5% since 1991, outpacing gold, which has returned around 7.8% annually over the same period. Research from Savills confirms that farmland values have experienced a 10% compound annual growth rate globally over the past two decades. While gold has seen periods of rapid appreciation, its volatility and cyclical downturns make it a less reliable long-term store of wealth compared to farmland.
A significant advantage of farmland is its ability to generate both capital appreciation and consistent income. Unlike gold, which relies solely on price appreciation, farmland produces annual revenue through crop yields or lease payments, creating a dual-income structure. The National Council of Real Estate Investment Fiduciaries (NCREIF) reports that farmland investments have delivered positive returns every year since 1990, even during financial crises.
Low Volatility and High Returns
Investors are often faced with the trade-off between risk and reward. However, farmland stands out as an asset class that offers strength in both areas. Delivering returns that are above gold and only slightly below the S&P 500, farmland boasts significantly reduced volatility compared to both asset classes. This unique investment profile has attracted the attention of renowned investors like Bill Gates and Warren Buffet, who have expressed a preference for farmland over cryptocurrencies and gold due to its production value and asset appreciation.
Why Farmland Consistently Appreciates in Value
Several factors contribute to the consistent appreciation of farmland:
A Declining Supply of Arable Land
The increasing value of farmland is driven by a fundamental economic principle: supply is shrinking while demand is rising. The United Nations estimates that the world loses around 30 million acres of arable land annually due to urbanization, climate change, and soil degradation. If current trends continue, the available farmland per capita will decrease significantly, making agricultural land even more valuable.
Increasing Global Demand for Food
With the global population projected to reach 9.7 billion by 2050, food production will need to increase by 60-70% to meet demand. This structural demand ensures that farmland remains a critical resource, with prices consistently appreciating as investors and governments recognize its importance.
Inflation Hedge and Economic Resilience
Farmland has historically provided an effective hedge against inflation. During the 2008 financial crisis, while equity markets collapsed, U.S. farmland values increased by nearly 30%. Although gold prices surged by 60% during the same period, its volatility makes it a riskier asset. In contrast, farmland has demonstrated stability through multiple economic cycles, making it an attractive choice for investors seeking capital preservation.
The Rise of Sustainable Agriculture and Carbon Markets
As the world shifts toward sustainability, farmland is increasingly viewed as a means of diversifying portfolios while contributing to environmental conservation. Regenerative agriculture, which enhances soil health and increases carbon sequestration, is becoming a significant driver of farmland appreciation. Additionally, the emergence of carbon credit markets is creating new revenue streams for farmland owners who adopt sustainable practices.
Investing in Farmland Through Portugal’s Golden Visa
Portugal presents a particularly attractive opportunity for farmland investing, especially following the opening of the Alqueva Dam in 2010, which has led to a strong supply of well-priced irrigated farmland. Institutional investment in Portuguese agriculture has risen by 120% since 2021, with €2 billion invested in 2023.
Coupled with the fact that Portugal boasts the highest-rated Golden Visa program in Europe, it’s no wonder that Pela Terra, Portugal’s largest agricultural investment fund, is already raising its second fund within the Portuguese agricultural sector.
Pela Terra: The Golden Visa Investment Fund for Farmland
Pela Terra’s investment model is straightforward and leverages the attractiveness of farmland to deliver positive returns for investors, society, and the environment alike. The fund focuses on acquiring olive and almond farms in Portugal, employing teams to operate these farms, and exporting the harvests to Spain. This model allows the fund to target a 5-6% annual cash dividend to investors while the value of the land appreciates.
The fund aims to sell its farms at the end of the holding period for a sustainable profit, sharing a target dividend of 15-20% in year seven, along with the return of the original investment. According to Alex Lawry-White, a Managing Director at Pela Terra, “Averaged out across the 7 years, we’re aiming for a 7-9% target annual return,” and the farms purchased in the first fund have already exceeded internal targets due to strategic investments in infrastructure and operations.
The Ultimate Portugal Golden Visa Investment
Farmland is not merely an agricultural asset; it’s a financial powerhouse that has quietly outperformed most traditional investments, including gold. As the supply of arable land decreases and food demand continues to rise, farmland will only become more valuable. For investors seeking both financial returns and a pathway to European residency, Portugal’s Golden Visa investment in farmland through Pela Terra presents an unparalleled opportunity.
By making farmland accessible to global investors, Pela Terra bridges the gap between sustainable agriculture and financial prosperity. For those looking to secure their wealth in a tangible, income-generating asset, farmland is the new gold.
If you’d like to learn more and speak to one of the experts at Pela Terra, you can book a call via their website. Alternatively, you can email them here or drop them a message on WhatsApp at +44 7768 929321.
Invest in farmland today and cultivate a prosperous future!
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