Farms, agricultural lands and forests: 8 tips for investing in “Romania’s goldmine”
Romania is one of the most promising countries in Europe as far as the agricultural sector is concerned. There are also many problems, but the situation has improved during the last 5 years. Nowadays this sector is considered one of the economy’s new engines.
While the Real Estate prices have collapsed since 2008, the agricultural farms, lands and forests have seen their prices increase. This happened mainly because they did not participate in the 2002 – 2008 price-rally. Also the high prices of commodities have made the investors’ business plans more sparkly.
Having been involved in the sector since 2005, I have followed up the sector’s evolution until today. If one would ask for 8 tips before investing in it, these ones would be:
1. 95% of “compact lands for sale” are not compact.
This is not necessarily a bad thing for an investor. But when you receive information about a property, try to figure out the reality behind the words. Usually in reality people offer you an “acquisition project”, which may need years to conclude. Thousands of people in the country claim that they can compact a land. Less than 30 can do it.
2. A low price is usually tricky.
If you want to buy 5 – 10 hectares, you can always find some people in need and pay them just 600 – 800 Euro / hectare. But really compact lands cost at least 2.000 – 2.500 Euro / hectare (and may exceed even 4.000). The chances of you starting from scratch today and compact those 600 Euro / hectare lands creating a 1.000 hectare compact property: Around 0,0001%.
3. The majority of lands (still) have no clear papers
For various reasons, the majority of agricultural properties in Romania remains without clear papers. So if you want to be the brave one to compact them, you will pay the land measurements, the cadaster etc., hoping that in the end everything will be alright and you will not become a “sitting duck” for some smart guys.
4. Ask for papers and insist
Generally speaking, many people are not so open to give you their property’s papers. Most of them don’t know how business is done. They have their own “rules”. Some have bad intentions (to steal from you), while others simply don’t trust you or anyone else. This is because…
5. …There are so many “intermediaries” in this business
If you ever wondered what happened to all the crooks / relics of the 2005 – 2008 golden era, stop searching. Almost all of them “work” in this sector (some also in Renewable Energy). They hate papers, formalities, controls etc. They want money and they can hurt any deal just out of lust. This is why owners don’t trust someone and give him the papers.
6. Be careful with concessions
Concessions are like a beautiful lady at 45. You don’t know if her beauty is natural or the result of plastic surgeries. Be VERY careful with these properties. Many earned lots of money, many lost as well. Only a good lawyer can protect you.
How do you access your lands? Do you have irrigation system channels? What is the soil’s fertility? What are the terms for exploiting the forest you were presented? Who verifies the farm’s equipment? Attention to details, it’s where the devil is hiding…
8. Your team, your involvement
If you want to invest in the potential of Romanian agriculture, choose the right collaborators, especially lawyers, consultants etc. Be ready for many disappointments and be sure that without your personal involvement nothing will work as you planned.
Farms, agricultural lands and forests in Romania may be a goldmine for the serious, careful investors. Or a disaster for the clumsy ones. Which type are you?
My company MORE Real Estate Services offers brokerage and consultancy services in Romania since 2004.
For existing farms, agricultural lands and forests we offer the following services:
• Tailor made search
• Off market opportunities
• M & A (buy out, long term private lease etc)
· “Turn-key” construction *
· Consulting on EU Grants *
· Several additional services *
* together with our collaborators