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Investing in Agricultural Land

Have you ever pictured yourself owning acres of arable farmland or a small forest in the mountains of Bulgaria? Investing in agricultural land is becoming more and more popular with knowledgeable investors looking to make large gains from a small expenditure base. Bulgarian agricultural land is often described as the most undervalued asset – it’s cheap to buy and the gains to be made are large, but what puts a lot of people off is tying up their capital whilst they wait for prices to rise.

Now there is another way to reap the benefits of your Bulgarian land investment by renting it out to the agricultural community who are literally clambering to find more available land to farm.


Bread basket of Eastern Europe

Bulgaria was renowned throughout the Soviet bloc as “the bread basket of Eastern Europe” because its favourable climate made it perfect for successful crop production. Farming has a long tradition in Bulgaria and there are plenty of schools and colleges which offer courses in modern Agriculture.


Nearly half of the country is classed as cultivated agricultural land and for the large international farming conglomerates as well as local farmers alike, Bulgaria has become the place to farm. The reasons are twofold; land here is currently around 12 times cheaper than the EU average and the European Union is making vast subsidies available to anyone who farms Bulgarian land. In 2007 subsidies amounted to 450 million Euros, which works out at 10 Euros per decare or around 10% on current land prices.



The EU factor

Membership of the European Union also means that agricultural land is protected from external competition through the “Fortress Europe” policies. Additionally, EU membership also brings open borders between member states, which means there is a larger marketplace for Bulgarian grown goods. The EU also doles out a host of export subsidies, tax-breaks and tax-incentives for production of bio-fuel crops and wind farm construction. These aspects alone makes investing in agricultural land an excellent choice and one set to bring high returns over the next few years as land prices shoot up as demand increases.


Global factors

There are important global factors, which are also starting to drive up Bulgarian agricultural land prices. Did you know that the rapid economic growth taking place in China and India, which will lead to higher meat and cereal consumption as living standards grow will push up the price for agricultural land?

Another factor is the constant increase in energy prices as we eat away at fossil fuel reserves; people are being forced to use for alternative fuels like wind farms, solar panels and bio fuels, fuels make from products such as corn and sugar – in effect fuel from plants, all of these alternative energy industries need agricultural land.


We also need to consider the economic impact of global warming, something we readily brush off as being another urban myth, but in the agricultural world, global warming has already started to have a big effect on crop yields and it has all worked in Bulgaria’s favour.


Were you aware that worldwide grain reserves are dwindling or that land availability is becoming limited because the global population growth and continued urbanization means that there is less and less land to farm?



Another consideration within Bulgaria is that a massive percentage of the land available is organic. Bulgarian farmers have been unable to finance such things as pesticicides. Thus land in Bulgaria is particularly suitable for organic farming.



Finding and buying

Of course all of this makes perfect sense, but how on earth do you go about finding agricultural land, how much does it cost and how do you buy it? Help is at hand with a number of qualified agencies that can help you buy, sell and rent your land as well as claim any due EU or government subsidies.

In effect, the procedure is no different to buying regulated land or property. You can view land details via an agent, check out the location online with Google Earth, which provides satellite images of the exact location or you can organise a viewing trip. Land prices vary in the same way that housing prices do and in a way they follow the unwritten rule of “location, location, location,” but not in the sense of a good sea view will yield dividends!

The north east of the country is known as the “Golden Dobrudzha” for the multitude of yellow grain fields. This is the agricultural world’s “Blue Chip” investment – high prices and demand is strong, yet you can buy agricultural land in some areas for as little 0.10 Euros per sq. m.


The centre of the country, which produces the famous Bulgarian Rose, whose oil is in most leading French perfume is grown on acres of agricultural land. The rose has to grow for three years before its petals are ready for harvest.

As soon as you have made your decision to buy the procedures are the same as buying a house; you set up a Bulgarian company, a solicitor researches the title, draws up contracts and the transaction is witnessed before a notary.


Being a landowner

Once you are part of the landed gentry, there are three routes you can take. Either you can land bank it and do nothing but wait to reap the returns as prices rise or you can earn rental income by leasing it out to interested parties as you might do with an apartment in the property market.


Finding the farmers to rent the land is easy and in many cases the farmer will approach you, the landowner, but again agencies exist to help you find the right tenant just as they do in the property market.

The best thing about renting farmland is that farmers want long-term rental contracts because they need time to cultivate the land and establish a good crop. Maintenance costs, which would be incurred as part of property rentals, are non-existent; there are no taxes and no annual payments.



Convert to building land

The other route you could research is the future potential to convert the status of your land from agricultural to regulated and then sell it on as building land at a much higher rate.

The laws on changing agricultural land were modified this year and the government has restricted the conversion of land close to the shoreline or in designated national parkland. It is still possible to convert land and a good solicitor will be able to advise on this issue, but generally over time land is released for development and often it is just a waiting game.


However, when your land is bringing you excellent rental returns, you may be better off sitting back and reaping the benefits of your agricultural harvest!