News

5 April 2017

Farmland for sale in Ukraine

Farmland is undoubtedly the black pearl in Ukraine’s crown. In the days of the Soviet Union, Ukraine was often referred to as the bread basket thanks to its vast swathes of fertile black soils, the ideal growing ground for a variety of crops.

Blessed with its impressive and fertile countryside, investors from all over the world have been drawn to Ukraine and its farmland. It was estimated last year that up to 2.2 million hectares of Ukrainian farmland was controlled by foreign investors and companies.

Despite a moratorium in place for the sale of farmland, this figure is still expected to grow. As the world population increases, more and more firms are seeing farmland as a safe investment.

On an almost weekly basis we are contacted by investors seeking to purchase Ukrainian agricultural land. We hope that this article will help answer some of the most common questions that we are asked.

The most common question we are asked is how much does it cost to buy farmland in Ukraine. There is no specific answer to this question as it depends on how much, where and what quality of land you are buying. However, as a general rule, the cost of farmland in Ukraine is well below that of many other European countries.

There is also the issue of technically not being able to buy farmland outright. With the moratorium currently in place, for a foreign national to actually purchase agricultural land is very difficult to do.

To get around this, most foreign investors will lease farmland for a period of 49 years and this is the typically the most common method we work with. As part of our service, Uaproperty will handle all aspects of the legal side to ensure that you obtain a lease that is completely sound and we have over 12 years experience with this.

It is worth noting that in mid February this, Ukrainian parliament has held discussions to end the moratorium. This is likely to have a positive impact on lease/purchase prices of farmland and open the market up to many more investors. It is hoped that by making the farmland market more open and flexible significant improvements will be made in efficiency within the sector. It has long be considered that Ukraine’s farming industry has far from filled its potential.

Many clients ask us to source farmland for them and we are able to assist. This a fee based service and we will discuss with you your requirements to best match them to suitable farms that are available on the market.

Can you get finance to purchase farmland in Ukraine?

Finance in Ukraine is extremely difficult to get, especially outside of Kyiv. And that applies to residents. For foreign nationals and corporations, getting a mortgage in Ukraine is even harder still. We strongly recommend to all clients to seek finance in their home country and elsewhere.

This is part of reason the cost of land in Ukraine is so low as there is almost zero finance available.

How much return can I get from my land?

Like with land prices, the amount you will be able to charge in rent will depend on a number of factors; what is the economic yield of the land (i.e. value of produce grown), land fertility and land scarcity. Other factors that will also influence include cost of any technologies used and commodities.

In summary, the low cost of Ukrainian farmland can present an excellent investment for those with capital already in place. We expect over the course of the next few years, government legislature in relation to farmland will continue to improve and we will see a direct translation into higher prices and yields.

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