How to shop for a vineyard, or a piece of it

Founded in 2012, Agrocorp Landbase sells managed farmlands. It claims to have developed 300 acres of such properties.

In The Vineyard, a quarter of an acre comes for Rs 65 lakhs. A large portion of each plot—around 60 percent—will be set aside for the vineyard. In a quarter acre (10,890 sq ft), 1,000 sq ft will be a multipurpose zone where anything can be grown, 1,000 sq ft will be for a lawn, 900 sq ft will be for the house and 600 sq ft for the parking.

What if a buyer decides that they don't want a vineyard anymore?

They can take out the vineyard and plant what they would like instead, like maybe fruit trees but the management of that farmed land will then be left to the buyer, said Ayan Nagpal in an interview to Moneycontrol.

“What we are offering is an experience of a vineyard. Growing and maintaining a vineyard is a highly technical job, and with Grover on board, a buyer will have 30+ years of experience to guide him/her,” he said.

Grover Zampa Vineyards’ chairman Ravi Vishwanathan has said they were partnering with an organisation “that had hands-on experience in Bengaluru's premium farmland market”.

Vishwanathan’s statement released to the press said, “While the wine enthusiasts and investors get a piece of the vineyard along with a farm, our winery benefits from getting the finest quality grapes from these communities.”

Buyer’s checklist

Second homes and farmhouses are becoming increasingly popular among urban Indians, according to Saurabh Mehrotra, who heads Knight Frank’s pan-India advisory business. 

Managed farmhouses tap into that trend.

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“Historically, farmhouses were being self-developed, and this came with various risks,” he told Moneycontrol.

There are risks associated with land titles, regulations and management of property post-possession, which includes bringing in utilities such as power and water, and ensuring there is no encroachment. Management post-possession can be prohibitively expensive, said Mehrotra.

Managed farmlands promise to eliminate these risks at a shared cost.

While this sounds perfect, there are things to consider before putting your money into one of these developments.

“The biggest thing to ensure is that the very reasons you are choosing to invest in a managed farmhouse are going to be taken care of by the developer. That the developer is not a one-time player, and that they have experience not just in land development but also in the management of the farm property,” said Mehrotra.

A buyer should check the service-level agreements (SLAs) or key performance indicators (KPIs) for or any kind of performance measures. These have to be written into the contract, said Mehrotra.

Also, the buyer should check what kind of land control the developer has. “If you are buying into a concept, check how that concept is going to be managed and for how long. Check what is the commitment of the developer beyond the point of sale,” he said.

Returns on investment?

Such farmlands give a capital appreciation of 1-2 percent on an annualised basis, and revenue from agricultural yields will usually be 3-4percent, he said.

The value appreciation comes from the management of the property. “Agricultural land is available in plenty in the country. What makes it unique and therefore will drive up the demand is what are the services that come packaged with the land, that includes development and post-development services,” he said.

So before you go shopping for a piece of vineyard or an organic farm or even a coffee estate, make sure you have this buyer’s checklist in hand.