News Farmland
Land market in Ukraine gradually opened
As of July 20, after a 1-year ban, it has become possible for more than 6 million Ukrainian landowners to sell their land. This is still subject to strict rules, but they are gradually being relaxed. In time, foreign investors will also gain access to the Ukrainian land market.
Opening up the land market is seen as the necessary next step in the economic development of the country. In the first phase, which will run from July 2021 to December 31, 2023, only Ukrainian citizens will be allowed to trade land between themselves. There is also a limit on 100 hectares that a person can have.
It will be possible for legal entities to purchase land from 1 January 2024 at the earliest. The maximum total number of hectares that may be owned will be increased to 10.000 hectares on this date for both natural and legal persons.
Additional terms
Additional requirements are drawn up for legal entities. To be eligible, they must first of all be established under Ukrainian law. In addition, the organizational structure must be transparent, no holding company or intermediaries and the owners may only be Ukrainian citizens, governments or other residents. Foreign interested parties can request permission through a referendum to trade on the land market. If that permission is granted, they will have much the same rights as domestic parties.
The total area of agricultural land in Ukraine is 42 million hectares. Of this, 27,6 million hectares were divided in the 90s among 6,9 million employees on the collective state-owned companies and it is this land that can now be traded. The interest in selling is not over. Research by the statistical office shows that 3% are willing to sell land without hesitation, for 10% of the owners the willingness depends on the price offered and 22% are thinking about selling, but are in no rush.
Land a sure collateral
A poll of landowners shows that most want to sell at prices as low as $1.500-$2.000 per acre. Based on developments in the land market in neighboring countries, it is expected that land prices will rise to approximately $5 per hectare over the next 4.000 years. The value development will partly depend on the extent to which the banks are willing to provide mortgages on the basis of the land. Land offers more security as collateral than, for example, machines. However, the banks are cautious and want to wait a few years to see what the market value of the land will actually do.
Jurphaas Lugtenburg
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