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If the investment potential of Romanian agricultural land is as great as we suggest, why are more foreign investors not taking advantage of it? The answer is simple: those unfamiliar with the country are often overcharged, or fail to navigate the bureaucracy.
At Farms in Romania, we can overcome those problems for you, whether you wish to invest as an individual or as a shareholder in an investment project. In both cases, we give you a straightforward and transparent route to an exciting and potentially highly rewarding investment.
Romanian law requires that new individual investors take ownership of a company which itself will hold the land. This legislation is set to change by 2012 under the terms of Romania’s EU membership and has already been amended for certain land types.
At Farms in Romania, we manage this whole process and provide you with all documentation to ensure that everything goes smoothly. Once your company is set up, the agricultural land you have selected will be transferred to it. You can then immediately start to benefit from exposure to the investment.
If you wish, you can enter into a management contract with us. We will tenant the land and collect rent on your behalf - generating income for you and ensuring the land is cared for. When you wish to sell, we can offer your site to both our extensive database of clients and through our partners in Europe.
Romania’s land prices have risen and are likely to continue
Agricultural land prices have risen in recent years in Romania. Market analysts expect this trend to continue as the country’s agricultural sector develops. Increases will be driven by several factors, including:
The countries which joined the EU in 2004 experienced similar growth patterns during their early years of membership. The following graph shows the land price growth in Poland over six years, for example. If prices in Romania were to only align with Poland’s over the next five years, IRRs greater than 40 per cent would result.
The pattern in Poland was even more pronounced and many market experts feel that Romania will develop in a similar manner:
“We view Romania as an exciting opportunity reminiscent of Poland 5-7 years ago.”
Brown & Co Ltd, UK
“Within the current range of investment possibilities in Central Europe, the example of Polish agriculture and fluctuations of land values can be used to judge future trends in nearby markets.”
Sentry Ltd
“Romania might become the third agricultural power in Europe after France and Germany.”
Lucian Anghel PhD chief economist BCR, Romania
Regarding the anticipated direction of future market movements, the comments below are taken from recent reports/letters compiled by market experts, the sentiments expressed are, we believe, representative and further opinions can be sought on request:
“Land prices in agriculture have gone up 5 times in 5 years to €1-3,500/ha but are still 3 to 7 times lower than in most European countries. Market estimates indicate that the price is likely to remain on this upward trend in the next years.”
Lucian Anghel PhD chief economist BCR, Romania
“Land values throughout Europe are in the process of realignment, the result at this stage can only be a prediction but neighbouring countries are a very positive indication of the future for Romanian agriculture. Germany : €20,000/Ha, Poland €8,700/Ha, Romania €3,000/Ha.”
Paul Christian BSc Sentry Ltd, UK
“I believe that generally, land prices have and will continue to rise. I say this as current prices in Romania are so far below those in the rest of Europe that the impact of poor credit is outweighed by the productivity of the business model for farming such cheap land keeping demand strong.”
Simon O’Connor MSc, AMI Project Management SRL, Romania
“I expect land prices to exceed €10,000/Ha... trebling in the next 3 years.”
Viroei Matei, president National Union of Romanian farmers
“The price of agricultural land is rising since Romania is in the EU because large companies want compact agricultural land.”
Dan Veverca PhD (marketing and economics) Institute of Agronomy and Silviculture Bucharest, Romania
Thus if prices were to only align with those in Poland during the coming 5 years, one would expect IRRs of greater than 40%.