“The markets of Romania and those of the Baltic region boast a high potential in terms of agricultural land price growth,” Ian Bailey, chief researcher at Savills, a British real estate consultancy that focuses on arable land, told ZF.
He says the low productivity and poor infrastructure are the factors generating room for growth in the future.
Romanian land remains the most appealing investment among all major European markets though prices have risen 25 times in the past decade, at an average pace of 40% per year.
The growth engine were the very investments carried out by foreigners, either relocated farmers or investment funds seeking low-risk placements on the long term.
The first to arrive in Romania were the Italians, followed by the Danish, Dutch and Middle East investors. All came to Romania seeking the fertile land plots of the Danube meadow, but also because prices were among the lowest in Europe. Some of them have already exited the market, others are still operating here, but their presence launched a true race for land.
Competition between Romanians and foreigners drove prices up and sped up the land pooling drive, so that half of areas have now come to be operated by semi-industrial and industrial farms.
However, the much lower prices compared with those of the Union’s mature markets are doubled by risks such as the lack of cadastre papers, poor infrastructure, the lack of irrigation, fragmentation and the impossibility of land pooling in some cases.
However, Romania is still on the radar of investment funds seeking secure returns, but also on opportunists’ one. A week ago, a German group announced it planned to place EUR32 million in Timis.
Agriculture is now having a season with grain and oleaginous crops close to all-time highs, with very good harvests for wheat and rape, as well as positive expectations for corn or sunflower. Nonetheless, the impact over the economy will not be higher than last year’s as grain and oleaginous seed prices are falling globally.
(English version by Catalina Apostoiu)