Agricultural land price goes up
A change in farmer’s subsidies after 2020 may lead to price drops if farmers’ income decrease
The first notion of money that can be profitted from agriculture came in 2005 – 2006 when the pre-accession programme for agricultural regions SAPARD made people look at their lands in a different way. Until then, most of the small-scale owners of the fields, who were over 2.5 million, either sold cheaply their own parcels or abandoned them with no further interest. But the first lease agreements, as well as the first signs of the waking market, changed things. Today, more than 10 years after Bulgaria’s admission to the EU, the situation is fundamentally different. The land is becoming more and more expensive every year but price growth rates have been decreasing since 2010. This is understandable because the solvent demand is already satisfied to a large extent and new players in this market are so far rare. The tenants invested in land ownership, but only in the best plots. Also, prices in different regions remained quite different.
The price of acre agricultural land in Dobrich, where the most efficient farming in Bulgaria is noted, reached 5000 BGN which was an absolute record for the country, show reports taken from specialized land trading agencies. These are single cases, of course, but reference to agencies specializing in this segment of the market show prices of over 2000 leva per acre and this is quite common. In the areas of General Toshevo, Balchik and Kavarna, the average price of an acre for sale is 2300BGN. Buyers do not announce the price at which they will be willing to buy, however, the availability of plenty of offers for sale, indicates that in the Dobrich region prices are close to the ones advertised by the sellers. However, this is the most expensive area to buy agricultural land in Bulgaria.
For example, the difference with the region of Veliko Tarnovo is nearly 3 times. The average price defined by sellers there is about 1000 – 1100 BGN/Dka. The same is the price level in the region of Stara Zagora. The average price there is about 1000BGN per acre, but the demand is lower than in Veliko Tarnovo. In the house of private bailiffs there are about 600 offers for sale of agricultural land at auctions. The average price from which the auctions start is just below 1000BGN. There are plots with average size of 18 acres, data shows. According to people who participated in the auctions, the interest is not great, it is only for certain land plots which purpose of use could be changed at a later point, prices rise above average levels.
What development is to be expected next for the market for farmland? The change in the subsidizing of farmers after 2020 may lead to lower prices if farmers’ incomes decrease, experts say. But this may not happen if larger investors appear on the market. In Bulgaria, there is already experience of renting and buying of agricultural land by companies for food and export production.
To date, Israeli and Chinese companies have shown the greatest interest, but interest on behalf of European investors should not be excluded either. However, the price of land in Bulgaria remains below the average for Central and Eastern Europe, not to mention Western Europe.