Farmland values will stay robust during the global recession, according to a report by Savills, an international property advisor. Parts of South America and recent EU-entrants such as Romania and Bulgaria will be particularly strong. Values have already risen by astounding amounts: Since 2000, Brazilian land prices have risen 350%, for example.
Between 2004 and year-end 2008:
Despite these increases, many Central and Eastern European values remain well below global averages – at 2,000 Euros/hectare in Romania, for example.
Investors are motivated by capital appreciation and the potential to increase income, according to Savills. "The most significant increases in returns are most likely where entry values are low or ag production is currently underperforming (lower left corner of graph showing EU land values plotted against a measure of gross margin). This could apply not only to parts of Central Eastern European Countries but to South America.”
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