First of all…
Facing an agonizing financial world after the ravages of COVID 19, tangible assets like agricultural land are attracting. We are looking for safe havens. Established as the new investment El Dorado, the agricultural land market is increasingly attractive. Is it smart to invest in agricultural land?
Globally, the population is growing very rapidly. With this demographic increase, it is also the food needs which are climbing at full speed. As such, agricultural land, given its scarcity, automatically increases in value on a global scale.
And in Mauritius then?
Investments in land are a safe bet, according to real estate professionals. Savings and the stock market are not the only investments available to Mauritians. Individuals are also looking to land. While buying building land, houses or apartments has become common, investing your savings in agricultural land is now a new option offered by some real estate agents .
Indeed, considering the volatility of the financial market, land is a safe and tangible investment that is constantly increasing in value every year. Agricultural land without any development appreciates on average 8% per year and can achieve an average capital gain of 45% over its initial value. In short, the value of land does not depreciate.
What about the price?
Undeniably, prices vary greatly depending on their location, but also depending on the vendor. They are not pre-established. However, the prices of agricultural land remain lower than those of building land.
Compared to the situation as it was 10 years ago and with a depreciation of the Mauritian rupee, prices have increased. For example, a piece of land which then cost Rs 800,000 may now be worth between Rs 1 million to Rs 1.2 million. The trend may remain the same for the next few years, but it is difficult to predict exactly how values will evolve. However, prices are unlikely to fall. Land that will then be developed will inevitably cost more. But land without development should all the same make it possible to achieve added value.
As the owner of agricultural land you have many advantages. You can rent the land from a farmer. Note that you can buy a plot already in use and continue the current rental.
Because we must conclude …
So, how smart is an investment in agricultural land? Well, above all, it should be noted that agricultural land remains a secure guarantee. The land will increase in value over time. A guarantee that can even turn into mortgage guarantee with your bank if you are thinking about taking out a loan. In addition, agricultural land, depending on its location, can now be easily converted into residential land where you can enjoy the luxury of owning a large lot. Finally, Mauritius still offers great opportunities since the prices are reasonable compared to those offered in the rest of the world.