Global Perspective. As the balance of growth shifts from developed to developing nations, the world will clamor for natural resources. Acquisition of land capable of satisfying that demand can help reduce volatility and protect principal, while providing steady income or appreciation as well as a protect against inflation. There’s also the reassurance of owning something real.
Near-term concerns about Europe’s still lingering economic crisis, continued signs of slowing growth in China and other emerging markets, and the rising national debt in the U.S. — not to mention a host of political and policy uncertainties at home and abroad — are all obscuring the long-term global rebalancing trend. Whatever the ups and downs of the current economic cycle, the fact is that the global economy is undergoing a fundamental and secular rebalancing of growth away from the developed world and toward the developing world. World population, expanding by 215,000 people a day, reached an estimated at 7.49 billion as of March 2017, — with fewer than 1 billion of that number living in the developed world. Yet developing nations now account for nearly 40% of total world imports and millions of new middle class consumers. One of the most salient features of this global bull marathon is likely to be an appetite for natural resources unprecedented in human history. For landowners, these trends present significant opportunities in food production (agriculture) including the production of wine and grapes.
Back to the future. Fully capitalizing on the opportunities means turning back to the asset class that fueled the first great American fortunes: land as real property — and the physical resources that spring from its soil— has pushed its way once again into the consciousness of affluent real estate investors. When the economy is strong, the products it yields can provide a natural hedge against inflation. And when the economy suffers, the land holds a store of value that many other investments cannot provide. As such, land and farms enjoy very low correlation to stocks, bonds, and other financial markets.
In Steven Zoernack’s new career, he plans to purchase and develop vineyards, wineries and raw fertile land which he expects to generate both income and capital appreciation throughout the term of his ownership of them.