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REAL ESTATE SHORTS

Farmland has become a profitable investment

INTEREST in buying agricultural land has been increasing. And not only Slovaks but more and more foreigners are interested in purchasing arable land, the price of which ranges in Slovakia from Sk40,000 to Sk120,000 (€1,328 to €3,983) per hectare. The returns on investments in agricultural land are long-term and thus the main interest in investing in this type of property comes from foreigners, the Hospodárske Noviny business daily wrote.

Most Slovak companies do not have money to buy land.(Source: SITA)

INTEREST in buying agricultural land has been increasing. And not only Slovaks but more and more foreigners are interested in purchasing arable land, the price of which ranges in Slovakia from Sk40,000 to Sk120,000 (€1,328 to €3,983) per hectare. The returns on investments in agricultural land are long-term and thus the main interest in investing in this type of property comes from foreigners, the Hospodárske Noviny business daily wrote.

“Most Slovak companies do not have enough finance to buy land from private owners,” Stanislav Nemec, spokesman of the Slovak Agricultural and Food Chamber (SPPK), told Hospodárske Noviny. “They [the owners] are interested mainly in a quick profit and the money they can earn from the sale.”


Over the last five years, several thousand hectares of land have been sold, according to the chamber’s estimates. For example, Dutch and Danish companies operating in Slovakia have become increasingly interested in buying it. The chamber also recorded efforts by several dozen firms from other European countries to buy further plots of arable land. Nemec added that “the trend of buying plots of land has existed for a long time but has recently intensified”.

“I do not give out information concerning this issue,” said József Nagy, the environmental manager for Danish company Dan-Slovakia Agrar, which Hospodárske Noviny reported is one of the firms with the greatest interest in Slovak land.

Another big player in the Czech and Slovak agricultural business, Agrofert, which is owned by Slovak billionaire Andrej Babiš, plans to buy plots from co-operatives in the Czech Republic. Although according to Hospodárske Noviny’s source in Agrofert, the firm intends to buy land in Slovakia as well, a spokesperson for Agrofert’s Czech parent company denied this.

Slovak agricultural co-operatives have also been trying to buy the land which they currently rent from the owners but since there are typically several, it is a slow process. “In almost 10 years, we’ve bought 180 hectares of land,” said Jozef Moravčík, head of the Agricultural Co-operative Senica.

Middle-sized Slovak co-operatives normally rent about 800 hectares of land. Moravčík added that “we also witness speculative purchases, when investors buy land from private owners, which until then had been rented by agricultural businesses”.

If land rented by a co-operative is sold to a different business, the co-operative can face problems. The co-operative’s access to the land can be complicated, and production space reduced, said Miroslav Vrban of the Ardis company, which deals with legal settlement of land purchases.

The increased interest in land has probably also been caused by the forthcoming adoption of the euro, Hospodárske Noviny wrote. After the euro is adopted in January, further price rises in arable land are expected. “The price of land has been growing by about 10 to 15 percent annually and is continually getting closer to the price for which the land is sold in Western-European countries,” Branislav Špirk of the National Association of Real Estate Agencies said. He expects prices to equalise within 10 years.

The price of agricultural land in the Slovak Republic is typically between Sk40,000 and Sk120,000 per hectare. In France, by comparison, it sells for Sk700,000 per hectare, in Germany for Sk800,000 per hectare and in Netherlands for Sk900,000 per hectare, according to the SPPK.


Topic: Real Estate


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