Land prices in Ukraine continue to rise

Since July 1, 2021, when the land market opened, the value of agricultural land has been steadily increasing, but varies significantly across regions due to a number of factors.

 

During 2024, the average price of agricultural land gradually increased, but in November it decreased slightly compared to October and amounted to 50,475 UAH/ha, and by the end of December it decreased to 47,948 UAH/ha. The highest land cost was recorded in Ivano-Frankivsk region, where it reached 90,240 UAH/ha.

 

However, the prices fixed in the agreements are far from the real market value of land, which in the central and western regions has increased from $1,000-1,500/ha at the beginning of the war to $2,000-3,000/ha and higher. According to the forecasts of the Ministry of Agrarian Policy, land prices will increase by another 20% over the next few years.

 

If in 2021 74 thousand land plots with a total area of over 178 thousand hectares were sold, then in 2024 - already 194 thousand plots with an area of about 400 thousand hectares.

 

In addition, in 2024, sublease rates for state-owned agricultural land unexpectedly increased. In October and November, at auctions in Prozorro, the final rental rates were on average nine times higher than the starting ones. Thus, at the auction for the largest plot in the Kirovohrad region with an area of 4 thousand hectares, the final rate exceeded the starting one by 11 times and amounted to 40 thousand UAH/hectare per year. According to Eurostat, currently in the EU the highest average rental rate for agricultural land is recorded in the Netherlands, where in 2022 it reached 843 €/hectare. Ukrainian farmers are already joking that, against the background of an anomalous increase in rental rates for state-owned land, a poppy or hemp boom should be expected in Ukraine next year.

 

However, most farmers who grow grain and other annual crops cannot pay more than 20 thousand UAH per year for 1 hectare of land, since if fixed costs approach $700/t, production becomes unprofitable. And classic agricultural farms with existing cultivation technologies will not be able to get higher profits. The head of the State Land Bank, Yaroslavsky, explains the high prices by the fact that the land is leased for 14 years.