For the investor prepared to commit to an element of risk, the diversified agricultural portfolio is a serious contender. Agricultural commodities and assets are now truly global markets, which are influenced by world events, and it is increasingly possible to hold a diverse portfolio within the sector.

The range of land-based enterprises, from food to energy production, offers farmland investors the opportunity to spread risk and maximise returns. A farmland portfolio can be spread across countries and regions, soil types, climates and enterprises enabling the ironing out of volatility across markets, inputs and outputs.

Our Global Farmland Index recorded an average annualised growth of 14.8 per cent since 2002 and 6.6 per cent over the past five years. This strong, steady growth with relatively little volatility shows the benefit of holding a multi-national portfolio.

While pressure on commodity prices is the common theme across the global downturn in values over the past five years, farmland values have shown less volatility than other commodities, being significantly less affected by the global economic crunch in 2008. Increased food production (balanced by reduction in food waste) and competitive land use continue to drive demand for this asset securing its status as an attractive longer term investment.

Successful return on investment relies on an increase in unit production through land improvement and the efficient use of the latest technologies, while balancing capital value growth with a reasonable risk profile. The right asset in the right market will yield positive returns for the investor in the long term.

The key challenges to a successful global farmland portfolio is to understand and manage the range of cultures, political administrations, ownership structures, tax regimes and foreign investment regulations.

Further information

Read more: Savills Global Real Estate Tips