The cheapest land in Europe: how the rules for land sales have changed in Ukraine, what about prices and how much you can buy

Land prices are rising in Ukraine. Even a full-scale war could not stop the demand for agricultural land.

On January 1, 2024, the rules for land sales were changed. The limit per buyer was increased from 100 hectares to 10 thousand hectares. At the same time, access to the market was opened to Ukrainian companies with Ukrainian owners.

The only real restriction is the ban on access to the market for foreigners. Read about how the price of land has changed, how much it costs in neighboring countries, and how it is affected by restrictions in the OBOZ.UA article.

People believe in Ukraine's victory, it is evident in the land market

Both demand and prices for land are growing, despite the full-scale war. According to opendatabot, the average price in the country is about UAH 41 thousand (EUR 970 ). However, this statistic also takes into account agricultural land in the frontline regions.

For comparison, in Ivano-Frankivsk region, the average cost of a hectare of land is 111.6 thousand UAH (2.63 thousand EUR), in Kyiv region – 82.4 thousand UAH (1.94 thousand EUR), and in Zaporizhzhia region – only 24.7 thousand UAH (585 EUR).

In addition to the region, the cost is also affected by the quality of the land and the rent, says Olexandr Chornyi, co-founder of Zeminvest, to OBOZ.UA. According to his estimates, the cost of a hectare ranges from 1500 to 2500 dollars (equivalent to 1354 to 2256 euros).

"Despite the war, the demand for land is growing. This is reflected in the cost of land. Even according to the official data of the Ministry of Agrarian Policy, the cost of land during the Great War increased by about 20%. The demand for land is growing today," the investor explains.

Denys Bashlyk, Deputy Minister of Agrarian Policy and Food of Ukraine, during a discussion of the land market organized by Prozorro.Sale explained that the price increase is indeed observed and it demonstrates faith in Ukraine's victory. "This is one of the indicators that 99% believe in victory, they are not afraid not only to buy but to invest in land," the Deputy Minister said.

This is in a situation where both land prices and demand are significantly constrained by a full-scale war. In 2023, both the Landowners' Association and investment companies reported almost record demand for land. This was against the backdrop of expectations that the rules of the land market in Ukraine would change in 2024. Therefore, the following restrictions have been in place since January 1:

• companies are allowed to buy land, but not more than 10 thousand hectares (in addition, the company must have Ukrainian owners and be registered in Ukraine);
• there is a ban on the sale of state and communal agricultural land,
• ordinary Ukrainians can also buy up to 10 thousand hectares (previously 100 hectares).

That is, the price increase last year was partly triggered by increased demand ahead of the changes. Farmers are afraid that large holdings will start actively buying up land, which will raise the price even more.

Oleksandr Chornyi adds that many have decided to invest in land immediately after the war ended, and this will further increase demand. It is hard to say how exactly this will change the price.

However, foreigners are not allowed to sell agricultural land in Ukraine. According to the law, this rule can only be changed by referendum. There are fears that foreigners may be the real owners of companies registered in the name of Ukrainians and buy land. However, the law requires a transparent ownership structure.

"Land prices will change in the coming years in line with the trends in European markets, i.e., they will grow. However, it is difficult to speak clearly about the growth rate today. This is primarily due to the war. The second stage of the reform, which officially started on January 1, 2024, was supposed to affect land prices, as legal entities would have to leave the market and increase the amount of land banks allowed to be owned by one person. Unfortunately, due to the outbreak of war, this trend did not have as much impact as it was predicted before the war," says Chornyi.

What is the price of land in other countries and what restrictions apply there

Neighboring countries have long allowed at least their citizens to buy land. The cost of land in different countries depends on many factors. The European Commission regularly analyzes the market situation.

According to the latest data, the average price of a hectare in the EU was EUR 10,578. At the same time, prices vary significantly. The most expensive is in Malta (€233,230 per hectare). Prices in Malta reflect the limited availability of agricultural land.

Prices within a country also vary by region. For example, in the Netherlands, the cost of a hectare ranges from 66,051 euros (in Friesland) to 150,644 euros (in Flevoland). In Greece, prices range from 6,290 to 84,820 euros.

In Poland, the average price per hectare is 11.2 thousand euros, but it is not allowed to sell to non-residents or to sell more than 300 hectares per person.

Romania is much cheaper (there is a limit of 200 hectares). Here, a hectare can be bought for 5.4 thousand euros, but the land is first offered to co-owners, then to individuals who lease the land, then to neighboring landowners, and finally to the Romanian government. Only then is the land open to foreign owners, provided they have been residents of the country for at least 3 years.

In Hungary, the average cost of a hectare is 4.9 thousand euros. Foreign citizens are not allowed to own land (unless they are citizens of an EU country), and no more than 300 hectares are sold in one hand.

In Slovakia, the price is only 4.1 thousand euros per hectare. The rules were eased by the introduction of the principle of reciprocity. Foreign investors can own agricultural land in Slovakia if their country allows Slovaks to own agricultural land. There are no restrictions on the area.

Relatively cheap land is available in Lithuania (3.7 thousand euros per hectare, the limit for legal entities is 2 thousand hectares, for individuals – 500 hectares), Bulgaria (3.9 thousand euros per hectare, only privately owned land is sold, but without restrictions on the area) and Estonia (3.2 thousand euros, both legal entities and individuals need to obtain a separate permit from local authorities, regardless of the area).

It is worth noting here that Ukraine cannot be compared to Lithuania or Malta, for example, in terms of the amount of agricultural land, its quality, and the prospects for passive income. Although Ukrainian land is getting more expensive, it is still undervalued.

Chornyi is convinced that the exclusion of foreigners has a significant impact on the Ukrainian market. If they were allowed to buy, they would invest, which would increase demand and the number of solvent buyers. Of course, such a situation would necessarily lead to a significant price increase.

The end of the war, even without changing the rules for selling land, will certainly lead to a significant increase in its value. This happened in all countries where the market was opened. Now the dynamics are being restrained by a full-scale war, and this factor makes it impossible to accurately predict the development of the situation.

"Talking about the future value of land in 5-6 years after the end of the war causes a lot of controversy and subjective assessments. Some predict the price at 5-6 thousand euros, others see it at 10 thousand euros, and some say the weighted average price is about 8 thousand euros. However, it is quite difficult to accurately predict the final price today," Zeminvest reports.

Despite the full-scale war, the land market in Ukraine continues to develop actively. Even now, supply cannot meet demand. At the same time, the cost per hectare is many times higher in all EU countries. Ukraine's accession to the European Union will provoke a rise in land prices. But this will enable owners to sell their property at its real value. Land that can feed hundreds of millions cannot be cheap.