Hot Real Estate? Hospitality? Commercial? Residential? None of the above...Arable is the answer.

Looking back today, I realised I have already posted 51 times since the blog started. A little less than Dawn Yeo or whatever her name may be but I am sure I make it up with a lot more substance. My mundane life is probably the last thing people would want to read about that is why I spend most of my time reading about investing finding little titbits of knowledge to share with all of you.

Since we are on the topic of mundane things, the market has been acting very much like my life. Boring and going downhill. The global markets have been spending much time in the red and a flat performance is considered a good day in the market these days. The relative strength index (RSI) of the US is currently standing at a very respectable 11.9, which is the lowest oversold region in a very very long time. This gives an indication of how badly the Dow has been performing over the past 2 weeks.

Let me first congratulate myself for my call on Asia Food and Properties 2 weeks ago. At $0.605 it was a bargain and those that have followed that call would have made good money because they would have gotten 1 Bund Centre Investments (BCI) share for every 2 AFP shares held. On the last day of cum entitlement, the price of AFP was $0.635 and after the BCI shares were distributed the ex price was $0.505, implying that BCI shares were worth $0.26. Now AFP's price have recovered back to $0.575 and BCI shares are priced at $0.49. Therefore astute investors would have made almost 100% on their BCI shares and still gained more than 10% on their AFP shares. What a return! Especially during such a horrible market condition.

Enough of the past, lets take a little look at the future. As a blogger who tries to post at least 1 post a week, it is sometimes difficult because it is not easy to find something interesting to write about every week. I did not manage to find time on Sunday to write because I was out attending a wedding of a fellow investment professional and it was definitely one of the few times when I did not mind the wedding lasting a little longer. Sitting on a table of private bankers is always a sure bet of having at least one hottie sitting there. But enough of that. Lets get back to today's post.

This week, I would like to share an interesting article which I read in the Business Times this week. The article was introducing the investment proposition of Agricultural land. You must be asking yourself, why is SVI talking about Agricultural land? No I am not hinting to all of you to go out and buy yourself a farm to grow crops or even raise cows. A year ago, I had this investment analyst introduce the concept of buying agri land to me. I found the argument very compelling but my first reaction was....how the hell was I supposed to buy agri land???? Do I just get off my butt and go down to Latin America, Australia or even China to buy agri land? I made a mental note to myself to find a way or a channel to gain access to it but thanks to my infamous short term memory, it just fell out of my mind...till today.

Why agri land? We can once again break this down to a demand and supply argument. Continued population growth, rapid urbanisation and land degradation will lead to a lower supply of agri land for the world. On the demand side of the equation, rising per capita income in emerging economies will lead to higher demand for meat, grain and other agri products. If that is not enough for you, the drive for alternative energy like biodiesel means that the competition for agri land use will heat up to a level never seen before.

There were also some performance numbers quoted in the article. Rabobank provided the figures and it showed how well agri land has performed over the past 11 years. With the best performer being pastureland in Sao Paulo, Brazil delivering 658% over the period.

So how do we, the common folk gain access to this investment? Well there is currently no direct way to do so unless you have tons of capital. I am sure one day some investment bank is going to package agri land pieces into a strutured vehicle for common investors to buy into, but that will mean management fees and also some sort of underwriting fees involved. I have to be honest, I hate paying fees, especially on a yearly basis regardless of whether the investment is delivering positive returns or not.

We do have the ability to gain indirect access to the ever appreciating agri land investment. Yes, you guessed it right. We can always buy into plantation, grain, dairy owners. There are quite a few out there, companies like Wilmar, Indofood, Sime Darby etc who own more than 200,000 hectares of plantation land each. I will totally look into studying companies that own such assets. Currently, I do not think many of such companies are cheap in terms of price to book values but a more detailed look will be needed to reach a more certain conclusion. But this is definitely an investment that I will be keeping a close eye on going forward.

Best,

SVI