When looking around for good investment ideas, buying land abroad should be among the top of the options. Land is a safe investment provided you select a country where rule of law is strong and the system of maintaining land records is good. It is also a high return investment provided you select a location where land prices are likely to go up quicly.

In this post we look at the factors that lead to land value appreciation and also the due diligence investors must do to see that their investments are safe.

Just like in the case of everything else, the value of land tends to go up when demand exceeds supply. And unlike most things, land is an asset whose supply cannot be increased to meet increased demand. As a result, the price increase of this limited supply asset can often be dramatic.

Demand for land goes up when:

• Population Increases: Population can increase owing to higher birth rates or through immigration and more people looking for land in a particular location leads to increases in the price of land
• Economic Development: Economic progress leads to higher demand for land to set up factories and build offices. It also means that more people will move into the growing areas, and that people will have more money to spend
• Social Changes: Developments like increased divorce rates and splitting up of joint families can also push up demand for land and its prices

The prospective investor should look at the specific factors that can lead to land price increases at a particular location. For example, demand for accommodation and land in a popular tourist destination is likely to go up when the tourism industry picks up after the world comes out of the present economic slump.

If a due diligence exercise involving looking at the political stability, legal issues of land ownership and availability of property management experts at the selected location supplements the above selection process, buying land abroad.

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