More than 50 percent from the real estate deals through the past couple of years have been ones for farmland. It turned into a hit for both Bulgarian and foreign investors. Another proof for this huge interest is to come out in the first days of September, when the biggest deal with farmland in this country will be closed. It amounts to some EUR 45 mln., as a pack of nearly 18 000 hectares (ha) will be sold to one buyer at a price of EUR 2500 per hectare. The buying company develops farmland business and RES projects. It has a portfolio of 35 000 ha till now.
The trends
Branch experts expect this year farmland deals to reach a number of 130,000 as the turnover will exceed 100 000 ha. However, major package deals are not included in this number. The farmland market has been extremely active for a second year in a row, which indicates its stability and predictability. That is exactly what attracts the potential investors, who look for agricultural terrains in this country. Bulgaria has 370 000 ha of farmland. Its owners are nearly 5 mln., but those, who actually cultivate or rent this land are ten times fewer. The other farmland owners are recently looking for ways to sell it with the idea to invest the money into something else.
Bulgaria on the global map
The most serious raising of the price of farmland in Central Europe has been registered in Romania, Hungary and Poland. The reasons are related to these countries’ EU accession. Bulgaria does not lag behind from the trends in the new member-states. The data cited next come from a research of the American Savills company for analyses. The price of the farmland over the past couple of years in this country increased manifold, jumping from EUR 1500 to EUR 2500 – 5000, depending on the area. Despite this agricultural terrains in Bulgaria remain among the cheapest in Europe. Farmland appeared to be the most secure and profitable investment in many countries across the globe. The risk in such an investment is something different. Bulgaria shows a relatively high percentage of potential risk, regarding farmland investments, compared to 14 other European states. This assessment is based on the political and economic conditions in the country, along with the climate’s characteristics for the region. Despite all this data shows that the possibilities for profits from farmland investments here are among the most serious. Thus Bulgaria lines up with Romania, Poland and the USA as a good option for farmland investors.
Why this interest in farmland?
The interest can be also explained with the fact that these terrains are a limited resource. The “granary” area of Dobrudzha in Northeast Bulgaria, the biggest region of this kind confirms this fact, since no deals have been closed there for months. While the increasing of food output is possible, the volume of the land remains the same. The global trends are for an increasing of farmland deals, hence the price of terrains goes up. The other thing is that the investment boom for other kinds of real estate is now gone without giving the results expected. So the new option – farmland trade, attracts more and more investors. The interest of the specialized investment funds and other companies, trading with land is also strengthening. More and more players appear on the market and those close deals for dozens of millions of euros. Private investors, Bulgarian and European farmers and international finance institutions and state funds from the Middle East look for large terrains. The World Bank has also shown a strong interest in investments of this kind in Bulgaria. Kuwait plans to invest USD 500 mln. in Bulgarian agriculture. China also entered the farmland market of this country. Chinese companies intend to cultivate some 10 000 ha in Bulgaria, as the first investment for farmland’s rent is to the tune of EUR 10 mln.
English version: Zhivko Stanchev
