Pension funds to boost investment in agricultural land, says AP Pension
DENMARK - Investing in agricultural land is set to become extremely interesting for pension funds from a strategic point of view, according to the managing director of Denmark's AP Pension, but he said the time was not yet right to buy Danish farmland.
AP Pension managing director Søren Dal Thomsen said: "Purely strategically, it will be highly interesting for a pension fund such as AP Pension to invest in agricultural land."
A change in the law governing agriculture has opened up the possibility for external investors to buy Danish farm businesses, the pension fund said.
But right now it is not realistic to buy up land in Denmark, Dal Thomsen said.
"Prices for Danish farmland are too high," he said. "But prices will fall, and when one day they hit the level they are actually worth, it will be appropriate for us to invest. If we do, we will have a return of 5% plus inflation protection."
Dal Thomsen was responding to a new analysis on the investment sector by Danish financial services group Nykredit.
According to the report, the current price for farmland in Denmark would lead to a return of around 3.25% for an investor putting DKK10bn (€1.3bn) into a purchase of 67,000 hectares of land.