Since they are outside of the more conventional assets such as stocks, bonds, and shares, India has seen growth and expansion in many real estate asset classes that are also classified as alternate assets. Residential homes are for the purpose of living but may also include passive investment benefits, while commercial real estate encompasses any land that mainly creates income or serves enterprises.
A new asset class of maintained farmlands has arisen in recent years and has rapidly gained attention. Individual investors (from non-farming backgrounds) had a strong barrier to entry until recently to take advantage of the growing value of managed farmland properties.
The newly amended Karnataka Land Reforms Act, 1961 now allows non-farming individuals and institutions to own agricultural land. This has opened up the market for regulated agricultural investments.
Farmland management as a financial asset:
Farmlands that are managed are those that are operated by individuals or institutions but are cared for by a professional organization. Farmlands, like every other form of property, are both movable and immovable objects. However, depending on the type of administration, plantation, and degree of resource production, they may be highly efficient land parcels. For new-age buyers, the ever-increasing value of land combined with cyclical crop or timber harvest, offers a passive wealth building tool.
Farmland acquisitions are becoming more enticing and beneficial as the global market for grain and timber continues to increase. Farmers are being forced to do more with less resources due to population increases and insufficient land area. As a result, areas with safe and sufficient surface and groundwater supplies will become highly desirable properties to own. These factors would raise the valuation of farmland and open doors for early new-age buyers in global farmlands.
The Real Estate Business in India:
Real estate has been the most common asset class in India for a long time. Since it has been such an appealing proposition, the real estate industry is the country's second-largest employer (after agriculture). It has consistently drawn investors seeking passive profits and rapid urbanization has given the market a massive boost. However, it is also accurate that India's real estate industry is crashing. Several real estate firms are in debt as a result of faulty regulatory frameworks and there is a growing inventory of unsold real estate ventures. People are searching for new ways to invest as a result of this condition, which is compounded by the Covid-19 pandemic.
Why are Controlled Farmland Investments better than Real Estate Investments?
A managed farmland scheme is one in which people can invest in a farm plot and then see their investments rise without having to control them themselves.
Although the value of land would undoubtedly increase in real estate, it will remain just that: land.
High-value timber forests or cyclic crop produce are examples of where managed farmlands outperform real estate. This ensures that a farmer who invests in agriculture profits not just from the rising value of their land, but also from the timber's return on investment. This provides a passive gain while simultaneously making a substantial contribution to the environment by having a self-renewing renewable cover. People have prioritized wellbeing above everything due to the pandemic; and a wide expanse of greenery might be just what one should look to invest in now.
What are the advantages of buying farmland that has been managed?
There are some advantages of buying property that has been treated according to agroforestry standards. Trees improve biodiversity and soil productivity in the areas where they are rooted. Carbon sequestration by forests will increase carbon accumulation, which is necessary to minimize greenhouse gas emissions that cause climate change. Since various species of plants and trees support each other symbiotically, companion planting of mutually beneficial plant species increases productivity. Wildlife has plenty of opportunities for foraging and mating in the agroforestry landscape, which is critical for animals to adapt and prosper.
Aside from their environmental value, maintained farmlands provide a much-needed weekend getaway. The tranquil environment of nature offers a welcome respite from the hustle and bustle of city life, and these eco-retreats provide a variety of facilities such as cottages, gazebos, and camping sites to enhance one's vacation experience. If you're looking for maintained farmland, Hosachiguru, Holiday Valley, and Jain Farms are three one-stop shops in Bangalore that specialize in this promising asset class.
