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Agro-Realty: A new investment trend in India

Agro-Realty: A new investment trend in India

In India, agricultural land has remained a symbol of social importance and power since time immemorial. However, in post-colonial India, the demarcation and fragmentation of parcels of land led to the use of land for investment purposes and gave rise to a now thriving trend in agricultural real estate.

Agricultural real estate is the division of large tracts of land for sale to individuals. This land is then used for agriculture and recreation. Despite originating from India, Western countries like the US and UK have been reaping the benefits of agricultural estates by growing fruits and vegetables for a long time. However, the trend of investing in agricultural real estate is also moving in India.

A closer analysis would lay bare the finer nuances of the agro-realty investment trend in India.

What is agro-realty?

In agricultural real estate, developers acquire large tracts of land and divide it into several subplots. These smaller lands are then sold to investors interested in making a profit from farming and gardening activities. The boundaries of these lands are set for agricultural activities and are preferred by investors in agricultural properties. The main benefit of agricultural real estate is that the total development cost of all the land is divided into several investors. This cost is much lower than the cost of buying real estate as a whole.

Many real estate developers offer agricultural land at attractive prices. These lands can be bought or leased for a specified period. Consequently, agricultural real estate has opened up new avenues of income generation, which have the potential to boost the country’s real estate landscape. Furthermore, it will be of great benefit to the now threatened food security quota in India.

Agro-realty in India

In India, agricultural activities have remained the focus of farmers’ interest and, until now, real estate investors have been cautious about investing in seemingly complicated farm machinery. However, with the emergence of the agricultural real estate trend, real estate investors began to explore possibilities to rent or sell land for commercial agricultural purposes.

The latest craze for growing and selling organic fruits and vegetables will drive the practice of agricultural real estate in India. A report from ResearchandMarkets.com states that the Indian organic food market is expected to grow from $ 177 million in fiscal 2020 to $ 555 million in fiscal 2026, with an annual growth rate of 26%. The size of the market of this size certainly enhances the convergence of investors in the lucrative agricultural real estate arena.

Furthermore, the advent of online farm-to-home delivery of farm products is encouraging many startups to enter the farm real estate business.

Viewed from a food security perspective, rapid urbanization and infrastructure development activities across the country are reducing farmland day by day and directly affecting the availability of food grains. However, the practice of agricultural real estate has provided an opportunity for small investors and entrepreneurs to start farming on a relatively small plot of land and reap the benefits. These companies attract customers with a pesticide-free policy, without intermediaries, and ensure the smooth delivery of organic food. With the increased awareness of health and fitness, and the penchant for pure agricultural products, it will be necessary to buy more land, and this will stimulate the agricultural real estate sector in India.

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Major advantages of agro-realty

The growing popularity of agricultural real estate is not without reason. The important advantages of agricultural real estate practices are as follows:

High Return on Investment (ROI)

Compared to traditional investment vehicles such as mutual funds (MFs), the stock market, and gold, the long-term ROI potential of agricultural properties is much better. With minimal efforts, favorable government policies, farmer subsidies, agricultural insurance, and improved storage infrastructure, the investment community is increasingly favoring agricultural real estate.

Non-depreciable Asset

Agricultural land, unlike traditional assets like apartments and villas, does not depreciate in value. Over time, the condition of agricultural land does not deteriorate and minimal maintenance costs are included. In addition to growing cereals, seasonal vegetables, fruits, and cash crops are easily grown on farm farms.

Lower Land Prices

The agricultural real estate model is based on dividing a large parcel of land between several investors. In this way, the cost of a furnished parcel of land is much less than what an individual investor could bear. In addition, investors in agricultural properties generally form communities and carry out agricultural activities by combining their parcels of land. Reduce the burden in cases of loss and increase profits.

Weekend Homes and Farmhouses

Real estate developers offering parcels of land for agricultural real estate purposes choose fertile and well-drained land. These lands are well equipped with water, electricity, shade, and connected roads. In addition to agriculture, farmland parcels can be used as weekend homes, farms, and wedding venues. Create an additional source of income for the investor.

Seamless Storage and Marketing

Traditional agricultural practices are generally based on government-backed storage and transportation facilities. Due to poor last-mile infrastructure and cold storage facilities, a large portion of agricultural produce is wasted. However, in an integrated approach to agricultural real estate, professionals take care of the storage, packaging and marketing of agricultural products, and no product is wasted. Also, since most of the agricultural farms are located on the outskirts of the city, the mileage from farm to market is less, ensuring minimal waste and maximum profits.

Environment Friendly

Since agricultural farms primarily use pesticide-free and environmentally friendly agricultural practices, Mother Nature and consumers will benefit. Agricultural farms ensure that agricultural practices go hand in hand with nature. Furthermore, less use of water, electricity, and pesticides is beneficial from a capital investment point of view and ensures maximum returns for investors.

In short, agricultural real estate practices provide a win-win situation for both the environment and investors. Low input cost, sustainable practices, and multiple benefits make it an attractive investment proposition. With favorable government policies and the emergence of organic agriculture, the sector is poised to witness increased investment. Although the agricultural real estate trend may be in its infancy in India, it has enormous ROI potential, and real estate investors are actively considering this vertical.

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