Land is a type of real asset that is tied more to the intrinsic nature of real estate than to the often-volatile stock market.
A real asset is any tangible good that has intrinsic value and therefore can be an investment. Real assets include land and developed real estate, precious metals (gold, silver, platinum), natural resources (timber) and raw energy (oil crude, natural gas and the like). Some consider real assets to be commodities; however, that term does not apply to all real assets. Petroleum is traded on a world price, but real estate value is extremely dependent on several unique factors, such as location and the potential uses of the property.
Real assets can provide a good hedge against other types of investments. For example, they have minimal correlation with publicly traded stocks and bonds. As a hedge against inflation, real estate and other real assets often increase in sync with consumer prices.
Real estate, in particular, is attractive to investors, owing to the historically low prices of land resulting from the global economic recession. But this cannot be said about all land, as it is a real asset with great variation. A 2500-acre parcel in the UK is not equivalent to a same-size parcel in Uganda, Columbia or Greece. The potential for each type of property is a function of how that land might be used in the near-term future, each affected by political and economic conditions. Population increase and pent-up demand also need to be taken into consideration when evaluating land as an asset. That is very much the case in the UK, where Lucent is currently focused. Population growth, driven in part by immigration, combined with insufficient investment in house building, has led to a chronic shortage of housing and a high demand for appropriate land.