The group Alfred Beck is a stakeholder in owns Magheru One building, another office building in Pipera area and several land plots in and outside Bucharest he values at EUR50 million.
“The farming holding is for my family as food production has potential,” says Alfred Beck.
He bought the farmland seven years ago and took this step as he already had experience in production through a 200-ha vegetal and animal farm in Austria.
“I chose Romania as in Austria land has been worked by the same persons for generations,” said the investor, who added that each hectare of land is valued at EUR8,000 in his native country.
Beck acquired 650 hectares of farmland in Olt county seven years ago, paying around EUR1 million (EUR1,500/ha), and since then he has not managed to significantly increase his exposure on this segment.
In the past seven years, land prices have almost doubled and the market value of the 650 hectares now stands at EUR1.8 million.
Such placements by foreign investors have in the past two years caused jitters in agriculture as domestic farmers started witnessing a real race for farmland in which the highest bidders managed to expand their farms. Rising inflows pushed prices upward. Investment funds and foreign farmers have been among the most dynamic players in recent years with holdings estimated at one million hectares, 12% of the arable area.
“Margins from agriculture stand at 3-4%, below other real estate placements and the profit is in reality the subsidy you get from the EU”.
In Austria, farmland subsidies revolve around EUR280/hectare, while in Romania the sum stands at around EUR150/hectare.
However, the real estate investor plans to double his farmland holdings to exploit the farm efficiently. Such a move would take around EUR3 million out of his company’s accounts, says Beck.
“Now, we manage to generate revenue of around EUR500,000, but productivity is low and there are problems with spring production because of the drought in Oltenia”.
Alfred Beck bought the farmland in Romania through AMB Holding group owned by his family and through domestic company Agro Company Srl. The Bucharest-registered company has not published its 2012 results, while 2011 data point to revenue of EUR0.4 million, a 23% net income margin and a single employee.
(English version by Catalina Apostoiu)