Don’t wait to buy real estate. Buy real estate and wait. – Will Rogers
Farmland investment, once relegated to the realms of agriculture enthusiasts and seasoned farmers, is now gaining traction as a viable investment option in India. As investors seek avenues that offer both stability and growth, the allure of farmland investment becomes increasingly evident. In this article, we delve into the definition, importance, and burgeoning interest in farmland investment in India.
Definition and Importance of Farmland Investment
Farmland, often overlooked in traditional investment portfolios, is emerging as a distinct asset class. Unlike stocks and bonds, farmland represents a tangible and productive asset. Investors acquire land for cultivation, providing a dual-purpose investment—capital appreciation and agricultural production.
The importance of farmland investment extends beyond financial gains. It is pivotal in ensuring food security, supporting agricultural practices, and fostering rural development. The intrinsic value of farmland lies not only in its potential returns but also in its contribution to the nation’s sustenance.
Overview of the Growing Interest in Farmland Investment in India
In recent years, there has been a palpable surge in interest among investors seeking alternative avenues.
According to moneycontrol.com, 30% of ultra-high-net-worth individuals chose to invest in farmhouses to park their money. This surge is attributed to a growing awareness of farmland’s unique advantages in a diversified investment portfolio.
Why Invest in Farmland?
A. Diversification Benefits
Diversifying investments is a fundamental strategy to mitigate risks and enhance returns. Farmland, with its low correlation to traditional asset classes, provides an excellent avenue for diversification. In comparison to stocks and bonds, farmland investments exhibit a lower volatility, offering a stabilizing effect on an investment portfolio.
An analysis of the last decade’s performance reveals that farmland investments have outperformed several traditional investment options.
The NSE Nifty, a benchmark stock index, recorded an average annual return of up to 13% from 2013 to 2023, while farmhouse investment gave significant returns in just a few years. For example, as per Sotheby’s International report, farmhouses in Delhi-NCR witnessed a yearly price hike of 20-25% in the last 1-2 years. Not only this but the agro realty sector is also expected to grow at a 34% CAGR to INR37,000 crores by 2025.