Offered: NVM Agricultural & Rural
Land Registry: trends in the agricultural land market
Paul Peter Kuiper works at the Land Registry on the provision of information about the agricultural land and real estate market. For example, together with Wageningen Economic Research, he developed the database with agricultural transactions that is used by real estate agents and he researches various aspects of the land market. He also conducts research into the development of the landscape. He publishes on both subjects.
The expert in real estate and rural land shares his vision on developments in the agricultural land market.
Inflation as a price determining factor
The price of agricultural land has recently risen further to €84.400 per hectare in the second quarter of 2024. According to Kuiper, various causes play a role in this, but there is one factor that receives little attention: inflation. "If you correct the prices of the past years for inflation, we are looking at a virtually flat line. Of course, not all price growth can be attributed to inflation, but it is a significant determining factor." Inflation is falling, which is why there is already talk of a possible fall in interest rates. "If that decline continues, borrowing money will become cheaper. The price of land could therefore rise further," says Kuiper. "Although it is always a complex web of factors that influence each other, so that development cannot be said with certainty."
Decreasing mobility
The number of land transfers has fallen sharply again, to 27.400 hectares in the Netherlands as a whole in 2023, Kuiper continues. "Compared to the long-term average (2012-2022), the amount of land traded is no less than 19% lower. This downward trend actually started in 2020 and has not yet been broken." There are several causes for this. "There is a lot of uncertainty in the sector about topics such as land-relatedness, derogation and nitrogen measures." The Land Registry does see increasing activity from the provinces in the agricultural land market. "Since 2021, we have seen that provinces are selling less and less land, and are actually buying more and more land. Now that the measures packages have been awarded to the provinces, I predict that a number of the provinces will become even more active."
Lot exchange as reference material
Finally, Kuiper points out the importance of the instrument of land exchange on the agricultural land market. "Previous research shows that no less than 18% of land transfers are made via land exchange. In some areas, such as Friesland, this is even 28%." The recent amendment to the law will probably have little effect on this. Kuiper indicates that from the perspective of the provision of information on the agricultural land market, the high share of land exchange is exciting because these transactions usually do not contain a purchase price or appraisal value of the transferred plots. "As a result, we are missing 18% of reference transactions! Finding good reference transactions would be helped if this information were made more available via the registered land exchange deeds. As the Land Registry, we want to promote transparency in the market. We therefore strive to make as much high-quality reference material available as possible. By including purchase price information in the land exchange deeds, we can really make a difference together with the real estate agency and the notary."
Click on this link for insights into the Agricultural and Rural real estate market for the first half of 2024.
