I.Investments in forestry and in agriculturally used areas are trendy in Germany. This has to do with climate change, but also with generational change, which is changing investment decisions of wealthy families. “We are getting a new class of investors,” says Maximilian Graf von Maldeghem, founder and managing partner of Latifundium Management GmbH.
Sustainability is becoming more important in investment decisions. “In the past, the principal often made the decisions in families alone; today, the whole family decides on the investments. It naturally plays a role that the younger generation thinks more ecologically. ”The lawyer and investment banker from Maldeghem himself comes from a family that has been running a farm for generations. The idea of concentrating on “green” investment had already grown for him before the public debates about climate change and CO2 emissions made the headlines. Latifundium was founded in 2010, and its clients are mainly family offices looking for investment opportunities for their clients, as well as wealthy private individuals and foundations.
“The driving force behind the international financial crisis was the fear of many wealthy entrepreneurs and families of hyperinflation as a result of the extremely loose monetary policy,” reports the count. Investments in agriculture and forestry appeared to be an attractive alternative. “Forestry is ideal there, even if the annual return is not high.” Tax law also helps: losses in forestry can be offset against profits in other areas, while the forest is increasing in value. Latifundium, based in Weilheim in Upper Bavaria, has a core team of six employees – but also a dense network of associated partners in the countries in which the company arranges investments.
Unnoticed structural change
In Germany, the expected return on agricultural land is on average between one and two percent, with forests between 0.5 and one percent, they say. With wind power or solar systems on the property, however, the return is noticeably higher. The market for agricultural and forestry land is currently changing fundamentally in Germany. This happens “largely unnoticed by the public,” says Christoph Freiherr Schenck zu Schweinsberg, managing partner of Schencks Land- und Forstimmobilien GmbH. The two companies Latifundium and Schencks have been cooperating since early summer, among other things, in the valuation of areas, the purchase and sale of assets and management issues.
The offer of agricultural and forestry areas in Germany is currently relatively large, reports von Schenck. He sees three reasons for this. “There is a structural change to ever larger areas. That goes largely unnoticed by the public. ”This process is being accelerated primarily by agricultural policy. “In addition, there is the debate about climate change, which is driving this process forward because investors are growing more interested in forest and agricultural compensation areas,” says von Schenck.
One hectare of forest binds around eight tons of CO2 annually. This roughly corresponds to the annual CO2 emissions per capita in Germany. The German forests bind around 14 percent of the CO2 emissions of the German economy. “The potential for afforestation is great,” says von Schenck. “I am always amazed at how little attention politics pays to this topic.”
Anyone who invests in agriculture and forestry diversifies, as with other investments. In addition to the German home market, which is in a state of upheaval, Latifundium is mainly concentrating on Scandinavia, the United States, New Zealand, Oceania and Uruguay. The South American country is sparsely populated and has large areas on offer, reports von Maldeghem. Uruguay has the three most modern pulp mills that supply the entire world market with pulp. “The country is already climate-neutral today, it also has a good education policy with a high standard of education and an investor-friendly economic policy.” America, the largest and most liquid market in the world, is not bypassing any investor, and Scandinavia is not only rich in forests, but also has the most innovative European ones Actors in forestry.
Von Schenck, whose family has had a large forestry business near Marburg for generations, says that demand is increasing significantly. The two companies do not offer funds, but – as Maldeghem emphasizes – “tailor-made solutions for private individuals, foundations and family offices”. His smallest transaction to date was $ 5 million. His cooperation partner says the number of transactions is increasing. “1000 hectares of property quickly cost 20 million euros. The prices for land are rising – worldwide. ”However, investors should always be aware that, even in times of climate protection, land and forest can only be an admixture. “We think it makes sense to invest five to ten percent of your total assets in farmland and forest,” says von Maldeghem.