Why Farmland Is The Future of Real Estate Investment?


When it comes to investment, a major number of options are subjected to market risks. A good turn of luck could bring in a fortune while a bad day could consume your savings and earnings within minutes and that is why people turn towards real estate and gold investment as they provide a lot more security and safety for the hard-earned money. Although gold is definitely an attractive choice, let’s talk about real estate.

When it comes to real estate, residential and commercial properties are leading the way for decades. They are investors’ favourite and lend a bit of glamour in the real estate investment but these notions are about to change because farmland and agricultural land promises a better future. “Why”,  you ask? Let’s delve deeper into the discussion and shine some light on the reasons.

1. The Growth Factor

Countries and cities are observing the era of development. Every day a new and unique architecture design comes up and ask for a piece of land for the construction. Where does that land come from? Surely, they are not making it anymore. Whenever a new demand for development comes through and city limits are pushed just a little bit more, the piece of farmland is eyed upon for the urbanisation which drives the prices way more than an owner could expect.

2. The Capital Security

Sure, the investment in farmland takes its own sweet time to juice up and provide the superabundant returns but it also offers the capital security which none other volatile options does. Rest assured, a ten-year investment in land is only going to give excellent return on the money, no matter where the stock market stands, whereas, other market-dependent options possess the risk of losing the capital without even a warning.

3. The Stable Income

Suppose one puts his hard-earned money in agricultural land for sale in Bangalore, a high-tech city of India known for all the good reasons and considered a heaven for investors, what are the options of the owners to generate income through this patch of land? They could sell but it is always a good idea to wait for the development to spruce up in the vicinity and let the demand rise before selling the property. So, what else they can do? Farmland provides a number of income-generating ideas that could make this investment a worthy one. If reports are to be believed, an agricultural asset provides reliable rates of income above 5% annually and a 100% of tenant occupancy rate, unlike commercial properties.

4. A High Return on Investment

We have already discussed the increment in the city’s boundary, multiple income-generating abilities and the capital security that farmland provides. All these come together to provide for a high return on the investment. The farmland investment constitutes both operating and capital returns due to the combination of rental income and appreciation in the value of the asset. The history suggests that farmland returns outweigh the combined returns from commercial properties, stocks and bonds while keeping the risk at minimum level.

5. A Stable Asset

Farmland has proved to be a stable asset when the market is chaotic in nature. At the times of the market uncertainty, it has shown strength and sustainability during the times when nothing was reliable and almost every investment option was tending to a high failure risk.

6. Simplicity and Transparency

Recently, a clothing retail giant declared bankruptcy overnight and send a wave of thought to every investor’s mind that how transparent an investment option should be? The account irregularity and corporate fraud are quite common in complex and opaque investment structures which harbours greed which is visible in the extortion fee of the poor performing investor managers. When it comes to farmland investment, the simplicity of direct freehold ownership seems attractive and lend a fresh appeal to investors around the globe.

7. The Tax Plan

In several countries, investment in farmland or income from agricultural land is tax-exempt or is associated with a number of tax benefits. These incentives are associated with farmland real estate which may include one or all of the standard taxes. This enhances the net returns on farmland investment as compared to other real estate options.

8. The Low-Income Volatility

There comes a time when the prime source of income produces no or less than useful results. If farmland investment is a part of one’s portfolio, the possibility of shortfalls is quite reduced during the tough times in the market. One bright example of low-income volatility is the farmland leasing model. In the long term, the rise in agricultural commodity prices is attached to the capital appreciation of the asset but the rentals from the leasing of the property help to combat the market volatility in the short term scenario. The changes in the market are borne by the tenant farmer, keeping the landowner safely at the bay.