Why Buy Land Now?

Over the next several posts we’ll take a look at who is buying land. In the current economic client it’s important to understand that buying land remains an excellent investment that should pay off for years to come. Let’s look at the first group of land buyers: Investors.

The sense is that the market is in a position for investors to repeat the real estate land grab of the 1980’s – instant riches from quick flips of raw land bought from the government at fire-sale prices.

According to Mike Bryant, a Dallas-based executive with Capmark Financial Group Inc., a California real estate finance company, “Some $300 billion or $400 billion in investment dollars could become available worldwide. There’s about 300 to 400 different funds being put together that are ranging in size from $25 million to $1.5 billion, and even up, who are going to get in there and bid on these assets”.

And these assets are being bought for pennies on the dollar. Take for example the $30.6 billion portfolio of mortgage-backed assets that Merrill Lynch & Co recently sold to Lone Star Funds for a mere $6.7 billion. Or the $22 billion mortgage portfolio that Black Rock purchased from UBS for $15 billion, with the assistance of the Teacher Retirement System of Texas, a pension fund with more than $100 billion in assets.