• CE Financial Observer

Arable land in Europe is becoming increasingly expensive

CEFO Ziemia w Europie coraz droższa jamnik

The average price per hectare of arable land in the European Union varies from as little as EUR 1,165 to as much as EUR108,000. Land is the cheapest in Bulgaria, in south of Sofia, and the most expensive is near Genoa, Italy.

According to the list published by Eurostat, the country with the highest average price of agricultural land (arable land) is the Netherlands, where in 2016 the purchase price of one hectare of land was close to EUR63,000. The lowest average price was recorded in Romania – EUR1,958 per hectare. In 2016 the average price of one hectare of land in Poland was EUR9,100. Arable land is cheaper than in Poland in 11 EU countries, mainly located in Central and Southeast Europe (CSE), but also in Finland, Sweden and even in France.

These prices should be treated as approximate values only, as in many European countries – including Poland – there are huge variations. The greatest price disproportions are found in Italy. In the region of Basilicata, located in the southern part of the country, one hectare of arable land cost – according to data for 2015 – less than EUR16,500. In the northern region of Liguria the average price was over 6 times higher. High variation of prices is also found in the Netherlands, Greece and Slovakia.

Significant differences in the prices of arable land are also found in Poland, which to a large extent results from the historically determined structural differences in the size of agricultural holdings, as well as differences in the classes of soil. Large farms dominate in the western and northern parts of Poland, where the demand for land is the highest. The southern and eastern parts of the country – especially in the Małopolska and Podkarpacie regions – are dominated by small, often fragmented farms. This structure is changing, but the process is very slow.

The highest average price of arable land is found in the Wielkopolska region, where in 2016 one hectare cost on average over PLN 54,000 (EUR12,400). The lowest average price was recorded in the Podkarpacie region – PLN23,200 (EUR 5,300). These are average prices recorded in the so-called private trading. Detailed data for Poland can be found in the Local Data Bank of Statistics Poland (GUS). Such datasets are important, among others, for those who want to sell even a small piece of inherited arable land.

The increasing importance of land is indirectly confirmed by the changes in prices in recent years. Arable land is becoming more expensive in all countries of the European Union, except for Greece, where the financial and economic crisis has clearly left its mark also on the value of land. The price of land in Greece fell by an average of 18.6 per cent between 2011 and 2016. The greatest, almost three-fold increase in the price of arable land was recorded in the Czech Republic – on average from EUR1,800 to almost EUR5,500 per hectare. However, land in that country is still cheaper than in Poland.

During this time the rate of increases in the price of arable land in Lithuania was only slightly lower – from EUR1,200 to EUR3,500 per hectare. Similar changes occurred in Estonia, where the price of one hectare of land increased in the years 2011-2015 from EUR1,100 to EUR2,700. In contrast, in the case of neighboring Latvia the price of land only increased by 24 per cent during this period. However, the price of land in that country is still higher than in Estonia.

The price of land increased by about 100 per cent in Bulgaria, Hungary and Slovakia, although the Eurostat data for Slovakia are incomplete and only limited to the regions. The price of land in the region of Bratislava, located on the border with Austria, has more than doubled, but prices are increasingly lower the farther we go to the eastern part of Slovakia.

In recent years the price of land in Italy has been growing much like in the case of CSE (an increase of over 80 per cent). On the other hand, prices of land in the Nordic countries, and especially in Finland, have remained stable (an increase of just 1.4 per cent).

In Poland, as in other CSE countries, prices of land have increased significantly over the past several years. Between 2011 and 2016 the price of land rose on average from PLN20,000 to PLN39,700 (EUR4,900 to EUR9,100) per hectare, i.e. an increase of 87.4 per cent. In 2015 the average price of land was higher, but only when expressed in the EUR, which was the result of changes in the exchange rate of the EUR itself. These differences are minor, however, when looking at prices expressed in the local currency, the average price of land only decreased in the Opolskie region (from PLN47,300 to PLN46,000 per hectare).

According to the latest GUS data, the prices of arable land in Poland continued to increase in 2017. Last year one hectare of arable land cost PLN41,288 on average, i.e. almost 4 per cent more than in 2016. In the Wielkopolska region the price of land increased to PLN56,721 (by nearly 5 per cent). The rate of price increases was higher in the Śląskie and Lubelskie provinces. Meanwhile a decrease in the price of land was recorded in the Łódzkie province. Generally speaking, the GUS data for 2017 do not confirm the fears about a drop in arable land prices following the introduction of significant restrictions on trade in land.


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