This index is important in terms of benchmarking land prices in rural and semi-urban areas. In such a case, the index will serve as a reliable source that will signal the potential conversion of agricultural land into real estate.
“With just over 200 million hectares, India is home to barely 2% of the world’s cultivated land; but feeds more than 15% of the world’s population. Recently, we have seen an increase in contractor interest in farmland and related occupations,” said Errol D’Souza, Director of IIMA.
“We believe the time is right to launch such an index for India. With ISALPI, we hope to build better sources of data for all stakeholders to make informed decisions at national and regional levels and support agribusiness activities,” D’Souza said.
Unlike financial assets, constructing an index for plots of land is a complex task due to price differences visible in different listings caused by a multitude of factors including supply and price factors. market-wide demand.
The Misra Center for Financial Markets and Economics of IIMA, under which this index is launched, will host this index on its official website.
“Investors could use this information to assess historical risk and return in the past and predict these parameters for the future in order to decide their investment positions. Fund managers and producers could use this information to broadly compare their own performance,” said Prashant Das, Project Manager and Associate Professor of Real Estate Finance at IIMA.
“Financialists and insurers could use this information to assess the company’s risk related to the asset class reflected in the index. Researchers could use this information to study how events and economic factors are associated with movements price in a specific asset class,” Das added.
Currently, ISALPI is based on land roll data from six states – Andhra Pradesh, Karnataka, Maharashtra, Tamil Nadu, Telangana and Uttar Pradesh. With the arrival of more data from other states in India, the index could be more valuable in two ways.
First, it will provide a superior representation of the national context. Second, it will offer a more granular index at the regional level.
Furthermore, this index can greatly benefit stakeholders from all walks of life, including policy makers, local governments, environmentalists, investors, real estate developers and financiers.
“SFarmsIndia has a strong focus on data warehousing and exploitation aimed at bringing cutting-edge AI capabilities specific to the agri-real estate domain to market. The collaboration with IIMA to develop an agricultural land price index (ISALPI) is an important step in this regard,” said Kamesh Mupparaju, CEO of SFarmsIndia.