Well managed farm lands are appreciating because of increasing population and income levels. When Big India Farms bought first lands in Sohagpur in 2007, the prices were in the range of Rs 30K to 50K per acre in interiors and around Rs 1-2 lakh per acre at the project site. Today, the prices are about Rs. 4 lakhs per acre where BIF operates within 2 kms from the project site, and about Rs 15 lakhs acre near the project site.
Once the ongoing projects of 4-lane roads and speeding up of railway lines in completed in next 3 to 4 years, we expect the land prices to more than double again, as it is one of the most fertile, scenic and central areas of India with big demand and influx from Punjab, Delhi, Mumbai, Ahmedabad and Nagpur, apart from local demand from Bhopal, Indore and Jabalpur.
Following are some data points on land appreciation in last 10 years:
Land block 1 at Sohagpur: Bought in 2007 for Rs 37K/acre. A following purchase by us in Apr 2011 on nearby farm land was at Rs 1.55 lakh/acre (418% in 4 years). Adjacent land of 77 acres was bought for Rs 1.9 lakh/acre (513% in 4 years) by a Hyderabad based group around Dec-2011. Today these lands are going at Rs 3-4 lakh per acre, if they are available for sale in the first place, because most lands in Sohagpur have been taken by long term buyers/investors.
Land block 2 at Seoni: Bought in 2009 for Rs 40,000/acre. Selling for Rs 1.1 lakh/acre (275% in 2 years) in Jan 2012. Today these lands are going around Rs 2 lakh per acre (over 400% in 5 years).
Land block 3 near Sohagpur: Has appreciated from Rs 1 lakh/acre to Rs 15 lakh/acre in 10 years (1500% in 10 years)
In all the above cases, land price appreciation has been due to improving infrastructure in the form of new highways, dams, telecom and dish TV reach everywhere. All our farm lands have strong potential for appreciation because of improving infrastructure, lower buying cost and BIF’s scale of operations.
Key Message: Despite price appreciation in last 5-10 years, farms lands in MP are still significantly undervalued compared to farms lands in Maharashtra and Punjab, which are selling for 4-5 times higher at Rs 30-50 lakh per acre – there is a bigger upside potential here in next 10 years – and farmers from these states are buying farm lands in MP by selling some of their expensive farm lands in Punjab and Maharashtra. These farmers know the value of good quality land and the lands bought by them will not come back for sale anytime in the near future.