Agricultural land deal numbers dropped last year in Latvia

The number of deals with forest and agricultural land decreased by a fifth last year according to Latio data, Latvian Radio reported on January 26.

Latio Forest sales department chief Jānis Vēbers said that last year 17% of the purchased land were bought by investors with foreign capital.

"Investors bought less but sold more of their properties. The structure of transactions varies there - investors buy from other investors, also buy from logging companies, from companies that specialize in buying and selling real estate, also sell to local companies,” Vēbers described the transactions.

“The market has not stopped, but has slowed down slightly,” the Latio representative said.

The Latvian Land Fund works mainly in two directions – purchases agricultural land properties and rents them to farmers, as well as offers a reverse lease of agricultural land with repurchase rights so that farmers can develop their farms and stabilize the financial situation.

Ina Alksne, head of the Land Fund, said the number of deals with farmland is falling each year.

“One is that there is virtually no free agricultural land, the market is quite divided and there are transactions where someone sells existing land to another, or maybe someone else is willing to pick up some untended land. In a way that consolidates and the creation of such new farms is not too active,” Alksne said.

“What was seen in the previous period was that both farmland prices and rental prices rose very rapidly. In turn, what we are observing right now is a decrease in demand for rent.

“Similar trends could also be observed in agricultural land prices - with this demand and the purchasing power of farmers decreasing, land prices will most likely not grow as fast as before this year, and price stabilization will be observed. The lowest prices are still in the Latgale region, on average it is currently EUR 3,000 per hectare, while in Zemgale, prices are highest and vary from 10,000 to 12,000,” Alksne said.

Jānis Vēbers, head of sales at Latio Forest, said the price of woodland fell below 4,000 per hectare last year and price growth was only seen in the last quarter of the year.

“So a hectare price of €3,650 - that's the average we've calculated. A quarter earlier, it was 3,400. Falling wood price … of course, these investors have also made up their minds to wait a bit and activity is lower, so there is such a waiting position. Everyone expects prices to grow, [..] and the market will be more active again,” Vēbers said.

Last year, the 10 largest transactions with forest and agricultural land in monetary terms were between €1.8 million and 5.1 million, and one hectare of agricultural or forest land cost between €3,200 and €8,000 per hectare.

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