Why to buy Land in Romania?
Foreigners Buying Agricultural Land Romania
Investors' interest to invest in Agriculture has noted visible growth in this sector over the last few years.
Since demand for food and other agricultural products is expected to
increase in the near future, investors anticipate high-profits from the
exploitation of the agricultural sector. In the context of spurring
worldwide interest in agriculture, Romania is one of the best countries
preferred by international foreign investors seeking to buy land in Romania.
Romania holds an important share of the European crop land due to its
grain production. Geographically, the country is well placed within
export routes. Romania's climate is also suitable for a wide range of
agricultural investments.
Despite all favorable conditions, Romania's agricultural sector can be
considered unexplored with poorly equipped companies; therefore foreign
investment has the premises to have a high impact on the country's
agricultural development.
Exchange of land, including land purchasing by foreigners improves
productivity, technology and enhances access to capital, hence
stimulating economy development. Based on these principles EU
regulations request a single free market with respect to land. Romania
has requested a transitional period during which the existing provisions
of legislation are still in effect until 2013. Therefore foreign
investors are prohibited from purchasing agricultural lands in Romania
until 31st December 2013. The most common method to make Romanian land
investments is by setting up a legal entity such as a limited liability
company, registered in Romania. After 31st December 2013, a term
unlikely to be extended, foreign investors will be able to purchase
agricultural lands in their own name.
Romanian Land Investments after 2013
After December 2013 EU-residents as well as non-EU residents will be
able to freely buy land in Romania. The procedure may vary depending on
the different regulations that will be adopted in the future, however
the process will probably have a simple framework. The best alternative
that you have is to opt for a due diligence analysis conducted by a
professional lawyer.
This includes verification of the property's Title
Deeds, Land Survey documents and obtaining an extract from the Romanian
Land Registry. After completing this very important step, a
pre-agreement should be drafted binding both parties to the sale,
ensuring the property has been checked. After this procedure a 10-20%
deposit should be made; however this step may vary from case to case.
Completing the sale requires both parties to be present (or duly
appointed representatives), as well as a notary that will collect the
relevant state taxes on transaction in addition to his/her fees. Signing
the contract and registering the transaction in the Land Registry
completes the sale.
The acquisition of agricultural land Romania by foreign investors is
expected to boom after the end of the land purchase embargo due to the
profitable premises of doing business in this sector. The acquisition
process may vary from case to case, depending on many factors that might
influence the sale process. However the frameworks of the whole process
are straight forward, implying a relatively fast way to build success
in the agricultural business.
Invest in agricultural lands in Romania
We are more and more people and our planet's resources are
increasingly scarce. We've all heard about the increase in food prices,
but maybe this can be a good thing for overall global food production
because they can stimulate investments in the agricultural sector. When
population and food prices are increasing on the domestic market, investments in land are the safest long term. Investors and land analysts recommended buying land for those who want a profit over time.
Romania has substantial agricultural resources, with an agricultural
area of 14.7 million hectares (or 61.7% of total territory) according to
statistics from 2009. The distribution by land use shows that arable
area is about 64% of the agricultural land, one third, 4.8 million ha is
occupied by pastures and meadows and orchards and vineyards and is
approx. 3%. Romania is located on the 6th place in Europe as an
agricultural area used (after France, Spain, Germany, Britain and
Poland) and on the 5th place as arable land (after France, Spain,
Germany and Poland). Currently there is no clear statistics on
uncultivated land surface but are estimated to be between 1 and 2
million hectares of land growing weeds. Nowadays, Romanian authorities
are trying to approve a law so that uncultivated agricultural land
owners will not receive subsidies from the state or to be forced to pay
penalties or higher taxes. In this way, Romanian authorities' intention
to introduce a tax on uncultivated land plots will oblige owners to
work, rent, lease their land or will boost land plot sales, will further
facilitate the acquisition of more fertile areas.
Why invest in Romania?
Low prices for land acquisitions are an incentive for potential
buyers and investors, since the agricultural land price in Romania is up
to five times lower than in other European countries. Our country
offers 1500-4000e/ha farmland, one of the best deals worldwide. Only a
few areas of the world can compete in terms of price and quality of
local soils. The acquisition of large areas of farmland seems to become
an important concern for food security in countries with growing
populations, like China, India or South Korea but also for the cash-rich
but poor in arable land, as Persian Gulf states. Taking into
consideration these advantages and money-hunger of the peasants, various
investment funds buy, in this period, large areas of agricultural land
more or less merged and different fertility. They have already bought
lots of acres and hundreds of thousands of acres have been leased,
especially in the west and south east of the country. Thanks to EU funds
that benefit Romania, fertile land and low agricultural
competitiveness, investment in this area is a very profitable business
opportunity.
Romania has the natural resources to feed a population four or five
times greater than the 22 million citizens, but in 2008 imported $ 6.1
billion food.
If you acquire a land with a very good soil and high fertility, you
should not have to worry about the not cultivated land plots, because
for example, in areas that are of interest for cereal, the investor who
buys land here will have 100% of the land worked through local farmers
who are interested in renting a land.
Not all plot lands are fertile and suitable for obtaining food, so
Romanian citizens and investors can opt for energetic cultures to
produce biomass, without entering into competition with agriculture for
food. Investors can acquires such plots at a much lower price and
invest in energetic culture to obtain higher returns and in the same
time be ecological. By setting up these types of crops that are planted
only once and are operated annually you protect the forest, no longer
being needed for irrational cutting firewood. In terms of financial
efficiency, this type of culture, according to the calculation of gross
margin results, is one of the highest in the agriculture industry.
In the recent years, foreign companies invest in Romania in
agriculture. Decades of low exploitation of the soil, the superior soil
quality, funding granted by the Romanian and European Union plus a
favorable world situation for agriculture and animal husbandry have made
Romania to become an the best open door to agricultural investment.
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