Startups are helping city buyers invest in farm plots, agro-forests
The new farm management companies help you make the switch to the countryside, right from sorting out the paperwork, lowering risks to managing the property.Updated: Jan 25, 2020 17:55 IST
As realty prices rise in the cities, there is growing interest in farmland on the edges of metropolitan areas. Some want it so they can do their own organic farming, others use it as a second home and rent it out to holidays as a means of income, still others just want an affordable investment, and some are using the land to plan their retirement homes.
Farmland is typically more affordable. And with the promise that metropolitan regions will grow, and make your investment worth exponentially more, there are start-ups now offering to help you make the switch to farmland, from the paperwork to the managing of the plot and eventual sale.
It is not an easy switch to make, going from urban to rurban or rural. Acquiring farmland alone can take years, and in some states is not really an option unless you can show that you have an agricultural background.
“The rules relating to the owning of agricultural land differ from state to state,” says Manish Ramjiyani, managing committee member of the Confederation of Real Estate Developers Association of India - Maharashtra Chamber of Housing Industry (CREDAI-MCHI).
For instance, it is very difficult to buy a farmland in Maharashtra if you are not from an agricultural background. Whereas that is not the case with states such as Telangana, Andhra Pradesh and Tamil Nadu. “Over time, as a city expands and the urban limits end up absorbing the villages on the outskirts, people tend to invest in plots on the periphery. But this too should be a considered decision, because if the metro does not come close enough, land prices may not appreciate, and could even be seen to depreciate over time.”
That’s what has happened with Venkatakrishnan, 56, from Mumbai. He invested in 3 acres on Old Mahabalipuram Road (OMR) in Chennai, a city that is fast expanding and including peripheral areas in the greater city limits. “The idea was that the value of this plot would appreciate greatly when the locality turns into a buzzing place with people renting and building homes here,” he says. “That hasn’t happened, and now I want to sell it but I cannot find a buyer. Rates too haven’t appreciated as I had expected.”
To help navigate the paperwork and minimise the risks and hassles of maintenance, startups such as Beforest and Hosachiguru have begun setting up and running agro-forest and agricultural communities, most of them on the outskirts of metro cities.
Bengaluru-based Hosachiguru describes itself as an agricultural asset management company. “We choose our areas based on several parameters,” says co-founder Srinath Setty. “Water availability, land fertility, soil quality and investor budget.”
Apart from fruits, vegetables, they also grow timber and guests can earn from the produce; all they do is invest the initial capital, and pay annual maintenance fees.
Set up in 2018, Beforest entered real estate with the idea of selling land, managing the farms of buyers and creating a community that lives amid agro-forests and farmlands. “I was planning to invest in a farm. But the return on investment was not much and managing it seemed very hard,” says Sunith Reddy. “I met many friends who had similar views in investing and that’s when we started the firm.”
The objective, Reddy adds, was to make owning farmland viable. “We create collectives of 30 to 40 buyers per plot. We have such collectives in Bengaluru, Coorg and Hyderabad. This makes the entire concept cost-effective when compared to one individual dealing with the hassles and spending huge amounts on maintenance.”
Kranti Vanga, 35, a business consultant, owns 2 acres of farmland in Anthappaguda village, 50 km from Hyderabad. He lived for three years, indulging his passion for organic farming. “Buying the plot was not difficult, but issues can follow later,” he says. Documentation, registration, and if you are living somewhere else, lack of security, are key potential issues. If there is any encroachment, it becomes very difficult to reclaim the plot entirely.
So when he bought his second such plot last year, it was a patch of agro-forest in Coorg — a house with a farm forest around it that he plans to use as a holiday home — run by Beforest.
“This place is so different from what I have back in Hyderabad. I am in middle of dense greenery, we take part in coffee harvesting, go on trails through the coffee estates, and there’s none of the hassle and stress of managing a farm yourself,” he says.
“This trend is still in its nascent stage,” says Samson Arthur, Hyderabad branch director at Knight Frank India, a realty research firm. “With affordable housing, there is demand for farmland. With the slump in urban realty and the costs still remaining inflated, people are turning towards this sector due to its long-term benefits. However, it is just the beginning now and land policies of the state has a bigger role to play in the growth of this sector,” he says.