September 22, 2022
Uruguay land values up due to increasing demand for soybean and beef
Uruguayan land brokers said increased demand for soybean and beef in the country are boosting rural land prices for the second year in the row, Bloomberg reported.
Pablo Albano, who oversees the real estate division of land-and-cattle broker Zambrano & Cia, said this year, many producers are starting to incorporate the increase in soy and meat into land values.
He anticipates a 10% to 20% increase in land prices. Albano said he hasn't been this busy since he took over the division in 2010 and closed more than 10 transactions this year.
Daniel Dutra, the director of rival broker Escritorio Dutra, said the number of transactions has doubled this year, and property values have increased by 5% to 10%, driven primarily by Uruguayan buyers.
Both predict that, barring significant swings in commodity prices, land values will stabilise in 2019.
Soybean futures have increased 9.1% in Chicago this year as food demand has increased globally and supply has been hampered by the drought and Russia's conflict in Ukraine, one of the world's primary producers of bread. This is increasing demand for agricultural products coming from other international suppliers like Uruguay.
Uruguay consistently ranks among the top 10 countries exporting beef to the world and is a significant producer of soybeans in Latin America. With shipments totaling nearly $1.9 billion through August, the nation's beef exports are on track to break their previous record this year. Additionally, wood pulp is one of the forestry products that Uruguay exports.
The value of agricultural lands has increased as a result of rising prices for such commodities, which have increased farmland returns. Last year, land sales in Uruguay increased by 51% to almost 232,000 hectares (573,000 acres), valued at $811 million. According to information gathered by Uruguay's agriculture ministry, the average price per hectare increased 6% to a four-year high of nearly $3,500.
Despite the fact that more properties are changing hands, the brokers claim that the market is still a long way from entering a speculative bubble.
The majority of land buyers are Uruguayans, with smaller numbers of Europeans, Americans, and South Americans following. Albano reported receiving inquiries from Argentines looking to invest US$30 million in grazing and farming land. Dutra is also getting inquiries from people who live elsewhere.