March 1, 2012

Romania's farmland cost to go higher

The price of Romanian farmland will continue to increase and it should stretch to an average of EUR3,000 (US$4,002.6) per hectare in three years time, reveals a DTZ Echinox report.

Currently, local farmland is between 3-7 times cheaper than in other European states.

The average price of a hectare of farmland was of EUR1,972 (US$2,631.04) last year, up from EUR927 (US$1,236.8) in 2007 and EUR1,700 (US$2,268.14) in 2010. There are, however, considerable variations depending on the region and the size of the plot. The real estate company estimates that there are about 500,000 hectares of farmland for sale in Romania, but most of it is available in small plots.

The 2010-2011 national agriculture census reveals that there are about 8.2 million hectares of arable land in Romania, placing it in fifth position in the EU, after France, Spain, Poland and Germany.

Low prices have attracted numerous foreign investors in the past years. About 8.5% of the country's total farmland is owned by foreigners (through local companies) according to data from the Ministry of Agriculture. Authorities in Bucharest have previously said that they are considering asking the European Commission to prolong the period during which Romania can restrict the purchase of local agricultural land by non-resident foreign citizens beyond 2014.

Although everyone agrees that the market is heading for consistent future growth, there are discrepancies between supply and demand. Investors, especially large foreign companies and investment funds, are looking for big, consolidated plots - investors are mainly looking for over 1,000 hectares - whereas about 25% of the country's agricultural land is estimated to be divided into plots of under one hectare. The lack of cadastral documentation and the high costs of obtaining it also add to the challenges the local market faces.