Agriculture land investment ROI in Johor

My dad is a plantation owner in Johor, Malaysia. He is always interested to buy lands. When I asked him how profitable is it to own a land, he just told me that the land price appreciate overtime. Beside that, the oil palm plantation is his major profit source.

I am very interested to know how the land ROI is, thus I tried to ask him the historical price of the land. He told me that the land was only about $8k sixteen years ago for one acre. The price has been appreciated a lot nowadays. It is about $60k right now. Using the financial calculator, the compound return from the investment for the 16 years is 12.7% from the capital gain not including the income generated from the plantation. If I could generate a conservative return of $200 per month from the plantation, the yield is estimated to be 200 * 12 / 60k = 4%. Thus the total return from the land investment is roughly 16.7%.

As you can see, although it is not a very good investment compare to investing in the properties, the risk involved in land investment is minimal.