In a first, IIM-Ahmedabad brings out agriculture land price index

In a unique initiative, IIM-Ahmedabad (IIM-A) has joined hands with an e-marketplace for agricultural land, SFarms India, to develop a farm land price index based on the sales and purchases done on the platform.

The index has been designed to record and present the “quality-controlled” data on prices of agricultural land in the country.

The Misra Centre for Financial Markets and Economy at IIM-A, under which this index is being launched, will host this on its official website and it will be called IIM-Ahmedabad SFarmsIndia Land Price Index (ISALPI).

“The index will track the price movements in the marketplace (SfarmsIndia) and come up with a composite pricing mechanism on a monthly basis, which will be updated twice a year,” Prashant Das, project lead of ISALPI and associate professor of real estate finance at IIM-A, told Business Standard.
 

The index will not have any correlation with circle rates but will use the prices quoted in the online market place as their base value for research.

SFarms India is an agricultural-land discovery platform, having more than 25,000 registered buyers and sellers. The platform has over 7,000 land listings, which are growing at around 15 per cent a month, according to its website.

“SFarms India is just like No-broker.com but only for agricultural land, and we will use the prices quoted there to construct the index,” said a source.

According to IIM-A, the index will be a reliable source in benchmarking land prices in rural and semi-urban areas and help in signalling converting agricultural land into real estate.

Given the complexity of developing an index for land parcels due to price differences, the index has been prepared to address the disparities and ensure accuracy. While ISALPI has started on a pilot basis in Andhra Pradesh, Karnataka, Maharashtra, Tamil Nadu, Telangana, and Uttar Pradesh, more data from other states of India is awaited.

With more data, the index is expected to offer a superior representation of the national context and a more granular index at regional levels. In addition, the index will benefit stakeholders across the spectrum including policymakers, local governments, environmentalists, investors, real estate developers, and financiers.

“The index can be used by local governments to compensate people who lose land for highway expansion,” the IIM-A stated.

Vinayak Chatterjee, chairman of the Confederation of Indian Industry Mission on Infrastructure, Trade and Investment, told Business Standard: “This looks like a promising concept because the starting point of any discussion on infrastructure projects is land prices and if someone can tell me with reasonable accuracy what could be the price of land in the area where someone is planning to put up a project as compared to other places, it will be great help.”

IIM-A Director Errol D’Souza said: “This is the right time to launch such an index in India. With ISALPI, we hope to build better data sources for all stakeholders.” Das said investors could use the information in the index to assess the risks and returns in the past and use these metrics to decide their investment positions.