Capital Growth Properties: A Vital Market Sector

Some land investments qualify as smart capital growth properties. Discerning good from bad is the ultimate goal.

While capital growth is a fundamental and obvious objective of any investor, capital growth properties are an important sector of the market that focuses on real estate.

There is growing interest in capital growth properties for a number of reasons. One is that a worldwide recessionary economy of several years has depressed the price of land almost everywhere. This spells opportunity for many investors. Another is that knowledgeable –or well-advised – land-focused capital growth investors can mine such opportunities that are otherwise overlooked by generalists.

Of note, prospects for a value return may be poor in some locations and countries, but expectations for value increases are justifiably greater in other areas. In the United Kingdom, there is a high demand for land caused by a chronic shortage of housing. The UK government is now committed to a major house-building programme, which will need land to be made available for development.

These factors reflect how land is quite unlike other investments, such as stocks, bonds, foreign exchange funds and hedge funds. The investor who is interested in capital growth properties must necessarily find land investment advisors who are intimately familiar with specific properties and all the variables affecting those properties. Those variables include local zoning, local economies (as they might affect demand for commercial or residential development, for example) and the nature of the land itself.

Capital growth is healthy in some countries but not in others. Investors prefer stable countries and economies with growth potential, including the United Kingdom, the United States, Brazil, certain Mediterranean European nations (France, Portugal and Spain) and several Asian countries (including China).