Investors turn to Romanian farmland

Photo: Rasears

Farmland in the UK has enjoyed major growth in recent years. In the second quarter of 2014, it broke through the £10,000 per acre barrier for the first time, according to Smiths Gore.

A growing number of investors, though, are turning to Romanian farmland, which costs just a fraction of the cost compared to farmland in the UK and Germany. Indeed, a hectare of Romanian farmland costs an average of $6,461, according to Savils (2012), compared with $25,575 in the UK. Prices are rising, though. In fact, Romanian farmland price growth is leading the world: Savills’ latest agricultural report showed that Romanian farmland values had surged 40 per cent in the decade between 2002 and 2012, double the global average.

Nonetheless, it remains more affordable, which, combined with its strong growth, is attracting a rising number of investors.

German farm manager ASI Europe GmbH now oversees approximately 4,000 hectares of Romanian land, while U.K.-based Velcourt Group Plc is also investing in the market.

Romania also has the most divided farmland sector in the EU, notes Bloomberg , with the average Romanian farm taking up 3.4 hectares, far below the EU average of 14.2 per hectares. This also makes it a prime market for investors seeking a bumper harvest of returns.

“If you want to continue to grow, land consolidation is the only way,” Peter Beerents, chief executive officer of Cibus Land Management Srl, told Bloomberg. “When small plots can be added to a larger whole, in general the value doubles.”