The real cost of 1 hectare of agricultural land in Ukraine has already exceeded 1.5-2.5 thousand dollars

The agricultural land market, which has been operational in Ukraine since July 1, 2021, is currently one of the most active in the country. Dzerkalo Tyzhnia tells in more detail about the dynamics of its development.

 

Figure 1 shows data on the number of transactions concluded over the entire period of the land market.

 

 

It is worth considering that the data for 2021 is provided only for the second half of the year, and the information for 2022 is incomplete, since with the beginning of the full-scale war, the State Registers of Real Estate Rights were closed.

 

Already in Figure 2, we can see that the average number of deals (calculated per number of months) in 2024 almost equaled the pre-war indicators.

 

 

Recall that in July 2021, the land market was open only to individuals, and only from January 1, 2024, legal entities will be allowed to buy shares from individuals. At the same time, the maximum area of land that an individual or legal entity can purchase is only 10 thousand hectares. Only privatized land is currently allowed to be purchased, while state and municipal land is only leased. The tenant of the land has the preemptive right of redemption, and the price of the land by 2030 must be no less than the normative monetary assessment (NGO), which is actually the state-determined value of the land from which taxes are levied.

 

From July 2021 to December 31, 2023, individuals concluded 249,916 land transactions, of which 109,205 were in 2023. In 2024, when legal entities were allowed to purchase land, 146,513 transactions were concluded. During the period of operation of the land market, 396,429 transactions were concluded for plots with a total area of 877,805 thousand hectares.

 

Before the full-scale invasion, an average of 12,455 deals were concluded each month, and already in 2024 this figure recovered to 12,209 deals, and will continue to grow in 2025.

 

The share of sold land is 4% of the area sown in Ukraine in 2024. That is, despite the activation of the land market, the number of transactions covers a small part of the cultivated area.

 

Figure 3 shows the total sown areas by region.

 

 

Experts believe that the value of land depends on its fertility (measured by creditworthiness) and the policy of the agricultural holding operating in the region (leasing land), as some of them actively buy up land, while others do not.

 

In general, land owners are in no hurry to sell their land, expecting prices to rise. There is also a category of buyers who buy land with the aim of reselling it at a higher price.

 

The list of legal entities that purchased agricultural land in 2024 includes 200 enterprises, but only 10 of them bought more than 1,000 hectares, and the maximum area of the purchased plot is 5,000 hectares, with a maximum permitted of 10,000 hectares (as shown in Figure 4).

 

 

However, among individuals, there are those who have almost exhausted the limit of 10 thousand hectares allowed for purchase (Figure 5).

 

 

The process of buying land is similar to the procedure for purchasing any real estate: the object is put up for sale through an advertisement on specialized websites and, if there is a buyer, a notary draws up a transaction. The significant difference is that in the real estate market the average transaction value is $50,000, and in the land market – only $2-5,000.

 

To execute a transaction, you need to have an estimated value of the land or a certificate from the State Property Fund of Ukraine. The price of the land cannot be less than the normative monetary assessment, which is mistakenly considered the market price. However, instead of the real market value, the agreements indicate the NGO, since taxes are paid from it. Previously, 8.5% of the value had to be paid to the budget in the form of taxes (5% - personal income tax, 1.5% - military levy, 1% - customs duty, 1%), and after the increase in the military levy - already 12%. Therefore, in most agreements, the price of the object is indicated by 2-3 UAH higher than the NGO, which is 2-3 times lower than the market value.

 

Currently, the real cost of 1 hectare of agricultural land in Ukraine has already exceeded $1.5-2.5 thousand. Thus, in the Rivne region, the average normative monetary assessment of 1 hectare is UAH 27 thousand, and the average price on the website of the State Geocadastre is UAH 49.4 thousand, while the real cost reaches UAH 60-80 thousand. This is significantly lower than in Poland or other European countries, where the average price of land is $10 thousand per 1 hectare. Although a similar price is found in Ukraine, it applies to agricultural land that can be used commercially, since they are located near highways and local roads, recreational areas or settlements and infrastructure.

 

Currently, Ukraine does not have control over the calculation of the value of land plots, similar to the one carried out by the State Property Fund in the real estate market. Therefore, land transactions are subject to sharp taxation (some pay the full amount, some minimize it), which violates the principle of fair tax payment.

 

This state of affairs is unacceptable, especially during a war, when the country's finances are directed to protecting sovereignty. Therefore, the State Property Fund must ensure proper control over the calculation of the value of land plots so that the principle of fair tax payment works in this area as well.