For generations, land has been a cornerstone of wealth and stability in India. However, for millennials, a demographic often stereotyped as disconnected from nature, there is a growing interest in farmland ownership that goes beyond financial gain. It is about cultivating a new relationship with the land, fostering environmental responsibility and building a legacy for future generations.
Traditionally, real estate has been the go-to investment for Indians. However, farmland offers a compelling alternative. Unlike volatile stock markets, farmland provides a sense of stability. According to a report by Colliers International India, agricultural land prices in India have witnessed a steady rise over the past decade, with an average growth of 8-10% annually. This appreciation is expected to continue as arable land becomes scarcer due to urbanisation and population growth.
Feeding the Future: A Sustainable Investment
By 2050, the . This exponential growth will put immense pressure on food production systems. Millennials, acutely aware of this challenge, are drawn to the farmland to ensure food security. Investing in well-managed farms contributes to sustainable agricultural practices that promote biodiversity and carbon sequestration, mitigating climate change.
Land prices in peri-urban areas have witnessed significant appreciation due to expanding settlements and infrastructure projects. Even in rural areas, factors like population growth and rising demand for agricultural produce are pushing up land values.
This appreciation is likely to continue. According to a report by the Federation of Indian Chambers of Commerce and Industry, India’s agricultural sector is projected to reach USD 330 billion by 2030. This growth will be fuelled by increasing domestic food consumption driven by population expansion and urbanisation. With a finite land resource, farmland becomes a valuable asset with the potential for steady capital appreciation.
The emotional pull of farmland is another factor driving millennials. Disconnection from nature is a prevalent concern in today’s fast-paced world. Farmland ownership offers a chance to reconnect with the earth, providing a sense of grounding and a deeper appreciation for the natural world.
Beyond Returns: The Environmental Imperative
Millennials are acutely aware of the environmental crisis. This awareness is shaping their investment decisions, with a growing focus on sustainability. Farmland ownership offers a unique opportunity to generate financial returns and contribute to environmental well-being.
Healthy agricultural practices, like crop rotation and cover cropping, can help in carbon sequestration, a crucial step in mitigating climate change. Farmland can serve as a haven for biodiversity. By promoting sustainable farming methods and adopting techniques that minimise environmental impact, millennial investors can contribute to a healthier planet.
The Rise of Impact Investing
Impact investing is a strategy that seeks to generate positive social and environmental impact alongside financial returns and aligns with the values of millennial investors. Several innovative models are emerging in India that allow millennials to participate in the farmland ownership experience while supporting sustainable agricultural practices.
One such model is fractional ownership where investors can purchase a portion of a larger farm, spreading the investment cost and risks. These platforms often focus on organic farming or regenerative agriculture practices, ensuring environmental responsibility. Another method is Real Estate Investment Trusts (REITs), which gather investor funds to buy and manage agricultural land. While currently not permitted in India due to existing corporate laws, this approach is popular in Western countries and might soon be introduced in India as a straightforward way to invest in farmland.
While the potential benefits of farmland investment are significant, there are challenges to consider. Access to quality farmland can be difficult, especially for smaller investors. Legal complexities surrounding land ownership and regulations can pose hurdles. In addition, unlike stocks, farmland is an illiquid asset, meaning it may take time to sell.
Millennials are redefining farmland investment in India. Driven by financial security, environmental responsibility and a connection to the source of their food, this generation is approaching farmland ownership with a fresh perspective. With innovative investment models emerging and the agricultural sector poised for growth, farmland presents a compelling opportunity for millennials seeking to cultivate a sustainable future.
| Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com |
Amit Porwal is the Director at Aranyakaa Farms, and has over two decades of experience in the real estate industry. He has an MBA in Marketing and Finance from CMS Bangalore and advanced accreditation in Property Valuation along with an ELP Program RICS.
In his career span he has had exposure to the robust property markets of Bangalore and Mumbai in India, to the Australian continent. He has worked with industry giants like Jones Lang LaSalle, Colliers International, and Embassy Group catering to a niche clientele like ANZ, Sony, Siemens, TATA, PWC, Vodafone, and Intuit.
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