The land price has risen cautiously in 2021 after the decline in the first corona year 2020. The increase in the land price coincides with a significant increase in the number of transactions. Although more land has been traded, the popularity of leases in particular is taking off in Italy. This is reported by the economic bureau of the Italian Ministry of Agriculture CREA.
Compared to 2020, the average price for Italian agricultural land at national level increased by 2021% in 1,1. This price increase is due to the northwest, northeast and the low-lying Po Valley regions. On average, a hectare of land in Italy costs €21.000. In the northeast and northwest, the average price is €42.300 and €29.100 per hectare respectively. Without the most expensive regions, the average price is €15.000 per hectare.
The number of land transactions has increased by 30% compared to a year earlier. Adjusted for inflation, the real value of land continues to decline according to CREA. The institute assumes 2021% inflation for 1,9. Compared to 2010, the fair value of land has decreased by 12%. The number of credit applications for the purchase of land has also increased again in 2021, but at 14%, much less quickly than the number of land transactions.
High cost price
The CAP reform does not have a major impact on the Italian land market. CREA calls this somewhat remarkable because in the new agricultural policy direct payments are gradually transferred from the more fertile and therefore more productive areas to the marginal agricultural lands. The uncertainty in the international economy is cited as a more important factor in the land market. This has not only led to a huge increase in production costs, but also to unprecedented differences in the prices of key agricultural products. However, it is not yet possible to say whether this will lead to a greater or lesser demand for agricultural land, according to CREA.
Renting land is becoming increasingly popular, according to data from the Italian Statistical Office. Compared to 2010, the area of land that is rented has increased by 27%. Approximately half of the Italian agricultural area is therefore owned by the farmer who cultivates it. That was still 2010% in 65.
The other half is leased or rented (approximately 5 million hectares) or used by the farmer through sharecropping or other construction (approximately 1,2 million hectares). The high cost price and the associated uncertain returns also increase uncertainty on the lease market, according to CREA.